Norway’s sovereign fund invests $707M in Turkey

Norway’s sovereign fund invests $707M in Turkey

Fifty-eight Turkish companies traded on Borsa Istanbul received last year investments worth $707 million from Norway’s Oil Fund, the world’s largest sovereign wealth fund worth over $1 trillion, according to the Norges Bank Investment Management.

The fund’s equity investments in eight Turkish energy companies totaled at around $111 million. It invested in Aygaz, Kardemir Karabük Demir Çelik Sanayi ve Ticaret, Tüpraş Türkiye Petrol Rafinerileri, Petkim Petrokimya Holding, Ereğli Demir ve Çelik Fabrikaları, Ulusoy Elektrik İmalat Taahhüt ve Ticaret, Aksa Enerji Üretim and Enerjisa Enerji.

The biggest energy investment of the fund went to Turkey’s refinery giant, TÜPRAŞ with $63.6 million followed with an investment of $28.8 million in Ereğli Demir Çelik. The Norwegian fund holds a 1.02 percent share in TÜPRAŞ and a 0.59 percent share in Ereğli.

Norges Bank, the fund manager, also invested $6.3 million in energy company Aygaz, where the fund holds a 0.99 percent share. In the energy sector, five other minor investments were made in energy companies, including Aksa, Petkim, Ulusoy Elektrik, Enerjisa and steel producer Kardemir.

The fund’s biggest investment overall was in Garanti Bank with $80.73 million for a 1.28 percent share interest. It also invested $74 million in Turkish lender Akbank and $55 million in the grocery retailer BİM. Turkey’s flag carrier Turkish Airlines (THY) also received $42 million in investments from the fund last year.

Norway’s fund has the largest ownership share in the Doğtaş Kelebek Furniture Company at 4 percent. It is followed by the clothing brand Mavi Giyim follows with a 3.29 percent stake.

Investing in Turkish companies since 2001, the Norwegian wealth fund has significantly ramped up its equity investments in Turkish firms in the last 11 years.

The Nordic country’s fund also diversified their investments in multiple sectors, ranging from communication services, glass and chemicals production to furniture, food and drinks.

Norway is Europe’s largest oil producer and the world’s third-largest natural gas exporter after Russia and Qatar. Its Oil Fund, officially known as the Government Pension Fund Global is currently worth more than $1 trillion.

The Norwegian government can spend only 4 percent of this annually, which is the expected real return on the fund, according to Norges Bank Investment Management that was delegated by the country’s parliament to

The fund, which controls more than 1 percent of the world’s market capitalization, enforces ethical standards on its investments. At the end of December, the fund’s equities allocation was 66.3 percent. Meanwhile, the fund had 3 percent in unlisted real estate and 30.7 percent in fixed income at the end of the year.

The Government Pension Fund Global had a market value of 8,256 billion kroner ($960 billion) at the end of 2018. The fund’s equity allocation has increased over time and the return on equities is therefore now more important for the fund’s overall performance than in previous years.

The return on equity investments in 2018 was the fourth-lowest since 1998 with minus 9.5 percent, after returns of minus 40.7 percent in 2008, minus 24.4 percent in 2002 and minus 14.6 percent in 2001. The negative return in equity investments stemmed from the growing concerns that hit hard equities around the world, particularly tumbling U.S. stocks at the end of last year.


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