Evaluation of infrastructure investment in the Government Pension Fund Global

The Ministry of Finance is to ask the Strategy Council to assess whether the Government Pension Fund Global should invest in infrastructure.

The assessment will cover both whether the cap on real estate investments should be adjusted and whether the Fund should be permitted to invest in unlisted infrastructure. “Developing the Fund’s investment strategy through better diversification will help to ensure continued robust, long-term management of the Fund,” says Minister of Finance Siv Jensen.

In 2010, the Fund was given permission to invest up to 5 per cent of its capital in real estate, and as a result Norges Bank is now making major real estate investments in Europe and the USA. The Bank anticipates investing 1 per cent of the Fund in real estate in each of the next two years.

The Fund’s investment strategy has been developed over time based on comprehensive assessments by specialists. The same approach will be adopted for the evaluation of the real estate cap and of whether investments in unlisted infrastructure should be permitted. The Ministry of Finance will take advice from both Norges Bank and the Strategy Council. The composition and mandate of the Strategy Council will be announced at a later date, with the final evaluation due to be presented in a parliamentary white paper on the Fund in the spring of 2016.

If general investment in unlisted infrastructure is permitted, Norges Bank will also be allowed to invest in unlisted infrastructure in the renewable energy sector and emerging markets. As with all other investments by the Fund, such investments will have to be evaluated on the basis of expected returns and risk.