Norway’s oil fund, where oil profits are stashed to help fund Norwegians’ pensions in the future, isn’t allowed to invest in companies that aren’t stocklisted or in the process of being listed. The fund’s boss has recently questioned that strategy, and seemed open to investing in companies long before they list on a stock exchange.
“The question is how important it really is for the companies we invest in to be stocklisted,” Yngve Slyngstad, chief executive of the oil fund, recently told newspaper Dagens Næringsliv (DN). With interest rates at record low levels around the world, and government bonds offering little if any return, Slyngstad needs to find new means of achieving the 4 percent annual rate of return expected on the oil fund. He’s hindered by another rule requiring that around 40 percent of the fund’s assets are supposed to be invested in government bonds, some of which lately have yielded negative returns.
In order to achieve higher returns for the oil fund, Slyngstad suggested it would be “natural” for it to invest in companies not just before they’re stocklisted but also after they’ve been taken off the exchange if they’ve gone private. That could be done through investments in private equity funds.
Slyngstad revealed that the oil fund has received offers to invest in companies like Facebook before they’re stocklisted, but couldn’t and thereby had to forego the rapid appreciation their stock experienced. Many other promising start-ups have approached the oil fund, looking for capital and offering substantial stakes, but the fund must decline because of risk issues. The fund also recently found itself in an awkward situation when it invested in a Formula One-related company whose stocklisting stalled.
It was unclear whether Slyngstad had cleared his musings on unlisted investments with the board of Norway’s central bank, which is responsible for the oil fund through its subsidiary Norges Bank Investment Management (NBIM). A bank spokeswoman would only say that the central bank “hasn’t offered any new advice (to politicians who set the fund’s investment guidelines) on whether to invest in unlisted shares, and has no plans to offer any such advice.”