Norway’s government has decided not to allow the NOK17.5trn (€1.5trn) Government Pension Fund Global (GPFG) immediately to invest generally in unlisted equity despite advice from the fund’s manager, saying such a major change required more information first.

In announcements made on Friday in this year’s annual white paper on the Government Pension Fund (GPF), the Finance Ministry also said it would start making withdrawals from the Government Pension Fund Norway (GPFN) – the smaller of the two funds making up the overall GPF.

Trygve Slagsvold Vedum, minister of finance, said: “The government does not wish to open for unlisted equities now.”

“This is an important decision, and we must allow time to consider it carefully,” he said.

“We wish to establish an independent expert council for the GPFG, and with input from this council we will get a better decision basis and broader debate about all aspects of investments in unlisted equities,” said Vedum.

The idea of setting a new, external expert council for the sovereign wealth fund was among the suggestions that the Sverdrup committee floated in its wide-ranging official report on the SWF in 2022.

The ministry said the new council would be established during the course of this year, with assessing different aspects of unlisted equities being one of its assignments.

The government’s decision not to allow private equity investment for now seems likely to disappoint the leadership of Norges Bank Investment Management (NBIM), with the GPFG’s management organisation having laid out a detailed plan for adding the asset type to the oil fund’s mix – envisaging an allocation of up to €64bn in 10 years’ time.

Nicolai Tangenat NBIM

 Nicolai Tangen at NBIM

NBIM chief executive officer Nicolai Tangen at the time said to journalists that the timing would be very good for an initial build-up of private equity investments by the fund, with many private equity investors wanting to sell into what was a difficult market.

Asked to comment on the government decision, a spokeswoman for NBIM said today: ”We think it is positive that the Ministry of Finance wants to further evaluate the option of including unlisted shares in the fund’s mandate.

”We look forward to meeting the Finance Committee in Parliament later this month to answer questions on the topic,” she said. 

In its white paper on the GPF, the Finance Ministry also announced it would start making withdrawals from the GPFN – a NOK354bn fund investing in equities and bonds of Norwegian and other Nordic companies.

Unlike the GPFG, the GPFN is a closed fund, neither receiving inflows nor making payments to the government.

But in recent years, its growing size has become a problem in that it potentially risks breaching its management mandate limit of 15% ownership in Norwegian companies.

“As a solution, the government is proposing to establish a rule for annual withdrawals from the GPFN, as of the 2025 budget,” the Finance Ministry announced.

“The annual withdrawals shall not be larger than what is required to handle the ownership stake challenge,” it said.

Vedum said there was broad consensus in the Norwegian parliament that the GPFN was a financial investor, and that the 15% ownership stake limit was important for the perception of the fund as such.

Kjetil Houg, CEO of Folketrygdfondet, said it was positive that there was a proposal that would help to solve aspects of the challenge of high shareholdings in listed companies on the Oslo Stock Exchange.

“Our goal will still be the highest possible return after costs, and this gives us as a business an even clearer purpose,” he said.

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