Norway’s Government Pension Fund Global plans to grow its direct real estate portfolio, rather than relying on joint ventures, and will begin investing in infrastructure.
The NOK5.1trn (€630bn) sovereign fund has also said that it plans to increase the speed with which it allocates to real estate, investing 1% per annum from 2014 onwards – a significant increase, as it has so far only allocated 1% of total assets after three years of activity.
Outlining its investment strategy for the three years to 2016, Norges Bank Investment Management (NBIM) added that it would increase its foreign exchange trading capabilities as it grew the number of foreign currencies to which it was exposed.
Addressing its equity strategy, it said the long-term investment horizon of the fund meant it was a natural “anchor investor”.
“The fund is in a good position to provide capital in special situations such as in relation to initial public offerings, secondary offerings and capital restructurings,” it said.
“We will use these opportunities to build larger ownership stakes in selected companies.”
It estimated that companies in which it held a stake in excess of 5% would grow from 2013’s 45 to 100 by 2016.
It would appear that some of this growth could stem from increased activity in the property sector, as greater involvement with listed property companies was an area identified as important for the fund’s growth.
“Larger ownership stakes in listed real estate companies and public-to-private transactions will be considered,” the NBIM’s strategy paper said.
”We will prepare the organisation for management of fully owned properties and a more active role in the development of our properties.”
Hinting at growth in Asia-Pacific real estate holdings, NBIM said: “In the course of the strategy period, we will also consider investment opportunities in global cities outside Europe and the US.”
It also confirmed that London and Paris would remain its focus for European investments, but that holdings outside the two gateway cities would be “selectively extended”.
Touching on the recent government announcement that the GPFG would grow its environmentally focused mandates by NOK50bn, the report said areas such as energy efficiency, water and waste management and pollution control could see investment.
It added that it would compile a standalone report on its environmental investment activities, with the mandates overseen by both internal and external managers.
NBIM said it would maintain its target of having 5% of assets overseen by external managers – an arrangement that currently sees investments in frontier and emerging markets outsourced – resulting in 100 external managers by 2016.
