EUROPE - The Norwegian Government Pension Fund Global will scout larger deals than previously in a bid to meet its 5% real estate allocation target, according to Øystein Sjølie, a spokesman at Norges Bank Investment Management, which manages the NOK3trn (€388bn) oil fund.

His comments follow the announcement that the fund would acquire a €290m three-asset prime Paris office portfolio from SEB ImmoInvest by the end of the year - its second deal via a joint venture with AXA Real Estate, which will manage both portfolios.

"This was really an appendix to the earlier deal," said Sjølie. "It wouldn't be right to call it a small deal, but we're looking at even bigger deals to meet the mandate - though we'll consider both."

Real estate currently makes up 0.4% of the oil fund's overall portfolio. Although the Norwegian finance ministry has mandated the fund to acquire sufficient assets annually to make up 2%, it is still significantly below that ceiling for 2011.

In the earlier deal, AXA Real Estate sold the oil fund 50% of its own €1.4bn portfolio, intending to reinvest the capital in the German property market.

An AXA spokeswoman today declined to comment on whether it had switched its interest back to Paris, saying only that it would "do the right deals at the right price - and it doesn't matter where they come up".

However, Sjølie said the oil fund would continue to look at remaining European markets: London, Paris and Germany's larger urban conurbations.

The fund will also continue to focus on joint ventures.

Sjølie said NBIM would develop competence as an asset manager, but not as an real estate operator. 

"We also want the asset manager to have an interest as an owner because that means they will be running an efficient business," he added.

SEB Asset Management did not comment before deadline today on whether the divestment of its Paris portfolio would enable it to reopen the fund for redemptions by the end of the year, as planned. 

The fund suspended redemptions in May last year and has since divested 10 of the fund's assets.

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