Will Consider How State Asset Management Can Be Established in Northern Norway
A new working group is set to look at how a new unit for state capital management can be established in the Arctic city of Tromsø. Among the questions is how it can be funded, which asset classes it should invest in, suitable risk level, and geographical catchment area for the investments. (Photo: Daniel Mikkelsen).
On Monday, Norway's Minister of Finance launched a working group that will investigate the structure and investment universe for a new state asset management unit in Tromsø, Northern Norway. "A game changer which will have major ripple effects across the High North," says the city's mayor.
On Monday, Norway's Minister of Finance visited the Arctic city of Tromsø and announced that a working group will look into establishing a unit for state capital management there.
"Now the work begins with investigating how we can strengthen the state's presence and build strong asset management milieus in the North," says Minister of Finance Trygve Slagsvold Vedum (Center) in a press release.
Finansminister Trygve Slagsvold Vedum med Tromsøs varaordfører Marlene Berntsen Bråten og ordfører Gunnar Wilhelmsen. (Foto: Tromsø kommune)
"This work is a part of the government's prioritization of Northern Norway, and the work of building strong milieus and activity throughout the country. Such an establishment could be a strength for Northern Norway and for the state asset management," Vedum adds.
The Minister of Finance discussed the new unit with Tromsø's mayor Gunnar Wilhelmsen (Labor) and deputy mayor Marlene Berntsen Bråten (Center) at the city's town hall.
"This will be a game changer which will have major ripple effects across the region and the High North. We are talking NOK 40-50 billion to be invested from here. Many positions requiring expertise. Incredibly important for the North!" comments Wilhelmsen on Facebook after the meeting.
Following up the Storting's white paper
The Norwegian government (Labor and Center) launched the goal of establishing a state asset management unit in Tromsø in this spring's white paper about the Government Pension Fund Norway.
"Whether this is going to be a new unit of Folketrygdfondet [the professional investment manager of the Government Pension Fund Norway], a unit subordinated to Folketrygdfondet, a new independent unit or part of another central government investment management body, is among the issues that need to be examined in more detail," writes the Ministry of Finance in the white paper. Whether the unit will be able to invest in unlisted companies in and outside of Norway will also be investigated.
In its stance on the report, the majority of the Finance Committee (all except the Conservative members) express that they "welcome concretization and further investigation of various alternatives for such a solution."
The working group's members
- Hans Christian Tronstad, Senior Adviser in the Ministry of Finance (group leader)
- Inger-Johanne A. Rygh, Deputy Director General in the Ministry of Finance
- Bjørn Hermansen, Senior Adviser in the Ministry of Trade, Industry and Fisheries
- Jørn Nilsen, Chief Operating Officer for Folketrygdfondet
- Egil Matsen, Chief Executive Officer of Forte Fondsforvaltning AS
- Katrine Tveiterås, Pro-Rector for Education at UiT The Arctic University of Norway
Primary plan
The new working group which will embark on such an investigation shall base their work on the following pillars:
- The overall purpose of establishing a unit in Tromsø is to strengthen state presence and create solid milieus for asset management in the North.
- The purpose of the investments of the new unit shall be the highest possible return after costs over time, taking acceptable risk into account.
Based on this, the working group will deal with two central issues: management structure and organizational set-up for a new unit in the aforementioned city, as well as the investment universe for the unit.
The group will also, as indicated by the Tromsø mayor, take as its starting point that the state's first contribution to the fund will have an upper limit of around NOK 40-50 billion.
It has been asked to submit its report by the 1st of December 2022.
A few things to work on
More specifically, the working group will, among other things, look at various management structures and setups, also in light of the laws on the Government Pension Fund and Folketrygdfondet, and assess the appropriateness and costs of different models.
There are, for example, questions about whether the placement of the unit within the Government Pension Fund Norway will require a change in the law, how the unit should be financed, and whether its goal of overlaps with the Ministry of Trade, Industry and Fisheries business-oriented toolbox.
The unit's investment universe will be assessed both with regard to geography, instrument use, and what can be considered an acceptable level of risk for the investments, including the investment horizon.
As a part of this, the working group will provide an assessment of whether the unit should be able to invest in unlisted companies in Norway and abroad.
This article was originally published in Norwegian and has been translated by Birgitte Annie Molid Martinussen.
