Government Pension Fund – Global
Country: Norway
Coverage: Vegar Heir
Established: 1990
US$ Billion: 396.5
Origin: Oil
Transparency Rating: 10
Summary:
The Government Pension Fund is a sovereign wealth fund where the surplus wealth produced by Norwegian petroleum income is held. The fund changed name in January 2006 from its previous name The Petroleum Fund of Norway. The fund is commonly referred to as The Petroleum Fund (Norwegian: Oljefondet). As of the valuation in December 2007, it is the largest pension fund in Europe and the second largest in the world with a value of NOK 2.019 billion, although it is not actually a pension fund as it derives its financial backing from oil profits and not pensioners. It is among the most transparent of the SWFs in its holdings & investments.
Corporate Governance
Investments have to be in line with the ethical guidelines based on sector and company behavior. The companies that the Fund invests in are closely monitored by a Council of Ethics. If companies are operating in conflict with the guidelines the Fund will consider withdrawal. Several companies have been excluded:
- Singapore Technologies, Singapore
- Kerr-McGee, US
- Alliant Techsystems, US
- EADS (Airbus), Netherlands
- General Dynamics, US
- L-3 Communications, US
- Lockheed, US
- Raytheon, US
- Thales, France
- BAE Systems, UK
- Boeing, US
- Finmeccanica, Italy
- Honeywell, US
- Northrop Grumman, US
- Safran, France
- United Technologies, US
- Wal-Mart Stores Inc, US
- Wal-Mart de Mexico S.A.
- Freeport McMoran, US
- Poongsan Corporation, South Korea
(Source: Norges Bank Investment Management. Annual Report 2006).
The guidelines restrict investment where there is a risk that a company is involved in activities that can contribute to violation of human rights, corruption, environmental damage or ‘other particularly serious violations of fundamental ethical norms.’
Purpose
The petroleum fund is investing parts of the large surplus generated by the Norwegian petroleum sector, generated mainly from taxes of companies, but also payment for license to explore as well as the State's Direct Financial Interest and dividends from the partial ownership of StatoilHydro.
It is predicted that revenue from the petroleum sector is now in its peak period and will decline over the next decades. The Petroleum Fund was established in 1990 after a decision by the legislature assembly Stortinget to counter the effects of the forthcoming decline in income and to smooth out the disrupting effects of highly fluctuating oil prices.
The wealth fund is administered by Norges Bank Investment Management (NBIM), a division of the Norwegian Central Bank.
Strategies and Objectives
The purpose of the Government Pension Fund-Global is to facilitate government savings necessary to meet the rapid rise in public pension expenditures in the coming years, and to support a long-term management of petroleum revenues. The fund invests a large portion of assets in fixed income and equities. They currently do not invest in private equity.
News and Updates
4/4/08
Norway's finance ministry on Friday proposed to change the rules governing the country's nearly $400 billion sovereign wealth fund to allow it to hold stakes of up to 10 percent in individual companies.
According to Reuters, the ministry in Norway "intends to raise the Pension Fund -- Global's limit on ownership stakes in individual companies from 5 percent to 10 percent. Finance Minister Kristin Halvorsen stressed to a news conference that the fund was 'clearly a financial investor and not a strategic investor.'"
read more: Reuters
Ministry of Finance - Norway’s position in the debate on Sovereign Wealth Funds
Location
Norges Bank
Bankplassen 2
P.O Box 1179 Sentrum
N-0107 Oslo, Norway
Tel +47 22 31 60 00
Website
Fund Site
1. All figures quoted are from official sources, or, where the institutions concerned do not issue statistics of their holdings, from other publicly available sources.
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