* May allow investments in private equity next year
* May also allow direct investments in unlisted equity
* Repeats won't allow investment in unlisted infrastructure
* Opposition will take up infrastructure question
(Adds quotes from deputy finance minister)
By Camilla Knudsen and Gwladys Fouche
OSLO, March 31 Norway's government may allow its
sovereign wealth fund, the world's largest, to invest in private
equity and unlisted stocks from next year but said on Friday it
remains opposed to letting it invest in unlisted infrastructure
The fund, into which excess revenues from Norway's oil and
gas production are saved, is currently permitted to invest only
in listed stocks, bonds and real estate. It can only invest in
unlisted equities if an initial public offering is planned.
Executives running the fund have previously pointed out that
many rapidly growing firms, including Uber and Airbnb, were
"The (fund) cannot currently be invested in unlisted
equities on a general basis. The Ministry of Finance intends to
examine, prior to next year's report on the management of the
fund, whether such investments should be permitted," the
ministry said in a white paper.
The deputy finance minister later told Reuters the finance
ministry was considering letting the fund invest in unlisted
equities, either directly or via private equity funds.
"We see that the listed market is a limited part of the
value creation by companies," Tore Vamraak said. "We see a
possibility to boost the return of the fund with a moderate
Since the fund started as a sovereign fund in 1998, it has
returned an average of just 3.79 percent per year, short of its
target of 4 percent.
The fund declined to comment.
NO TO UNLISTED INFRASTRUCTURE
The minority government repeated it was opposed to letting
the fund invest in unlisted infrastructure such as roads,
bridges and wind farms, due to the political risk these
investments may carry and their high transaction costs.
It had opposed loosening the rules in last year's review but
lawmakers had said the question should be discussed again.
"This is disappointing. The government is not delivering on
the order from parliament on infrastructure. This will guarantee
that there will be a further deep debate on this topic, so this
question is not closed because of this no by the government,"
Torstein Tvedt Solberg, the spokesman for the opposition Labour
Party, on the fund, told Reuters.
The government confirmed it would propose that the fund be
allowed to increase its equities allocation to 70 percent from
60 percent, moving away from bonds, and that expected annual
spending from the fund be cut to 3 percent from 4 percent.
Tom Sanzillo, director of finance at the U.S.-based
Institute for Energy Economics and Financial Analysis, said the
government should look again at unlisted infrastructure
"They seem to be walking away from a market that is a
trillion dollars and that is growing exponentially in the coming
years. This is not prudent," Sanzillo, who wrote a 2017 report
on renewable energy infrastructure investment and the Norwegian
fund, told Reuters.
"They appear to lack confidence in their own abilities and
that is worrisome."
(Writing by Gwladys Fouche; Editing by Terje Solsvik and Alison