NBIM Denied Private Equity Investing Permission, For Now

The $1.59 trillion sovereign wealth fund of Norway has consistently asked the government for permission to invest in the private markets.



Norges Bank Investment Management, Norway’s sovereign wealth fund, tried again to get approval from the country’s government to invest in private assets and again heard no, at least for now. The finance ministry said a council would study the matter.

The bank manages $1.59 trillion in assets, in a portfolio that is 70.9% equities and 27.1% fixed income. Real estate comprises another 1.9% of the fund’s investments, renewable energy infrastructure makes up 0.1% of the fund. These four asset classes are the only ones in which NBIM invests, however, it has long sought to make allocations to the private markets.

The Norwegian Ministry of Finance turned down the private-markets request, saying that private investments charge overly high fees. The fund, which made the latest request in November, had made a similar request in 2018.

The government issued its decision on the latest request in a white paper released on Friday. The document called for the establishment of an expert council to review NBIM’s proposals on investing in private markets. The council will be established sometime later this year.

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“The government does not wish to open for unlisted equities now,” wrote Norway’s Minister of Finance Trygve Slagsvold Vedum in the paper. The council, he added, will be independent and its expertise will give the ministry a “better decision basis and broader debate about all aspects of investments in unlisted equities.”

The paper also stated that high fees associated with private equity managers, as well as the difficulty of measuring risks, compared with listed equities, are reasons that NBIM should be blocked from PE funds. Besides, NBIM is mandated to cap fees from external managers, and the paper said private equity managers are unlikely to accept that. 

But the ministry did note that there is a potential for private equity investments to outperform the average investor’s return. 

 “It will, however, not be possible to eliminate all risk associated with the non-financial aspects of unlisted equity investments,” the white paper stated. “Given the information currently available to the ministry, the ministry does not wish to expand the investment universe to generally include unlisted equities.”

NBIM in a November letter had expected to be able to allocate between $40 billion and $70 billion dollars to a private equity strategy, making up roughly 3% to 5% of the fund’s portfolio. 

NBIM’s letter argued that private assets would render higher returns over time. “It is our assessment that permitting investments in unlisted equities would be a natural evolution of the investment strategy,” said Ida Wolden Bache, chair of Norges Bank’s Executive Board, in a November 2023 press release.

“An increasingly larger share of global value creation takes place in the unlisted market.”  

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Shareholder Funding Dries Up for Thames Water; Regulator Blamed

Institutional investors say Ofwat inaction is preventing them from providing further funding to the beleaguered utility.




Thames Water’s shareholders say they are “not in a position to provide further funding” to the beleaguered British utilities company, and they blame the situation on inaction by U.K. water service regulator Ofwat.

Thames Water is a private utility responsible for water utilities for 16 million people in the greater London area. The company’s major institutional investors include the Canadian pension fund, the Ontario Municipal Employees Retirement System, the U.K.’s Universities Superannuation Scheme, the China Investment Corporation, and a subsidiary of the Abu Dhabi sovereign wealth fund.

In its Monitoring Financial Resilience Report for 2023, Ofwat said Thames Water needs to “deliver a significant improvement in performance, alongside a need to strengthen its financial resilience.” As a result, multiple investors, including the USS, cut the value of their investments in the company. The Ofwat report noted that to support a turnaround, Thames Water received an equity injection in 2022-2023 and a shareholder agreement for further funding by 2025, subject to conditions. The report added that the company and its shareholders both “acknowledge that further equity investment will likely be required.”

However, those conditions apparently were not met, and Thames Water shareholders are pointing fingers at Ofwat. In a statement released by the USS on behalf of all shareholders, the investors said they and Thames Water had been working with Ofwat for more than a year on how to address the “complex challenges” facing the business, which include meeting current funding demands and the “urgent need for substantial investment” to improve the firm’s performance.

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The shareholders said that after the talks with Ofwat a business plan was submitted aimed at improving customer service and meeting environmental standards, which included what they claim is the largest ever investment program by a U.K. water company at more than 18 billion pounds ($22.4 billion).

To support the investment, the shareholders said they committed to supporting another 3.25 billion pounds of investment in addition to the 500 million pounds provided last year. They also pledged not to take cash out of the business until a turnaround was delivered. The shareholders say the proposed solution addressed “the root cause of Thames Water’s challenges” without requiring British taxpayers to foot any of the bill.

“However, after more than a year of negotiations with the regulator, Ofwat has not been prepared to provide the necessary regulatory support for a business plan which ultimately addresses the issues that Thames Water faces,” the shareholders said in a statement. “As a result, shareholders are not in a position to provide further funding to Thames Water.”

The shareholders added that they will still “work constructively” with Thames Water, Ofwat and the U.K. government on how to “address the consequences of Ofwat’s decision.”

Representatives for Ofwat did not immediately respond to a request for comment regarding the shareholder’s comments.


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