The Norwegian Government Pension Fund Global (Oil Fund) is continuing its property-shopping spree and has its eye set even further afield in the medium term.
Yesterday saw the fund acquire a 50% stake in seven major properties in Paris. “The investment is in line with our strategy to initially invest in the biggest European property markets before expanding into other regions,” said Karsten Kallevig, Director of Norges Bank. “It also reflects our preference to form partnerships with investors that both own and operate properties.”
This latest move comes not long after its acquisition of a 25% stake in London’s Regent Street late last year. After yesterday’s transaction, the Oil Fund will have a 50% stake in the Parisian properties, with the remainder being held by the insurance giant AXA.
Having received a mandate in March 2010 to invest up to 5% of the Oil Fund’s assets in real estate, Mr Kallevig is bullish about the Oil Fund’s prospects for the near future.
Whilst Norges Bank concentrates the fund’s investments within Europe at present – he says the Oil Fund “is an obvious advantage” as an investor in capital projects thanks to its being “debt free” – he does not rule out further global expansion in the near future.
“I can well imagine a situation where we do something more in Europe before year-end. So it could be possible with a team that in 2012 looking at opportunities in the U.S., but here we are dependent on tax and legal issues can be resolved. And in 2012-2013, it could be useful to look at key markets in Asia.”
The Norwegian Government Pension Fund (Global) had a market value of approximately 400 million euros at the end of March 2011 and consisted of 61.3 percent equities, 38.6 percent fixed-income securities and 0.1 percent real estate. It is nicknamed the Oil Fund because it was set up to re-invest Norway’s surplus petroleum income.