NEWS

Norway’s $1 trillion wealth fund said allowing it to invest in private equity would boost returns and spread risk to a broader range of companies.   

In response to a request by the Norwegian Finance Ministry, the fund on Wednesday said given its size and long-term outlook it was “well-suited” to invest in unlisted equity.

A broader universe may “enable the fund to be invested in different types of companies to those that are available in the public equity market,” the fund said in a letter to the Finance Ministry. “Based on historical data, investing in unlisted equities can also be expected to generate a slightly higher return after costs than listed equity investments.”

“In the U.S., the number of domestically listed companies has dropped almost 50 percent since the fund began investing in equity,” it said. “We find the same trend in the U.K. Elsewhere in the world, the number of listed companies increased until 2011 but has since fallen slowly.”

The fund argued in the letter that its experience from investing in real estate has given it the necessary know-how for private equity. It says the most relevant approach would be to invest in and alongside private equity funds.

Read the full story on Bloomberg.com