Norway sovereign fund raises India infrastructure bets

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Norway’s Sovereign Wealth Fund has upped its India infrastructure exposure in the past two to three months with the $500 billion monster buying shares in stocks such as Indiabulls Power, Lanco Infratech, Nagarjuna Construction and IVRCL Infrastructure from the open market by spending Rs 100 crore.

The Government Pension Fund (Global), managed by Sebi-registered Norges Bank, seems enthused after posting its fifth-largest quarterly return in third quarter and has since October 2010 consistently bough infra stocks, which have been underperforming for the past two to three years.

In just five major infra counters, Europe’s largest pension fund spend around Rs 100 crore — chiefly focused on companies from South. Norges Bank bought 1 crore shares in Indiabulls Power in the first week of February, that is, February 3. A day before that, it hiked stake in Lanco Infratech by buying 50 lakh shares. In the last week of January, it bought 20 lakh shares in Nagarjuna Construction Company. In fact, the fund has been extremely active in 2011. In the very first week of the new millennium, it had bought 14 lakh shares in Lanco. At the end of November 2010, the fund bought 19.4 lakh shares in IVRCL Infrastructures & Projects.

Norges Bank Investment Management, which manages the Norwegian Government Pension Fund Global, has in February 2011 names Trond Grande as its new deputy chief executive officer.

The fund, which is considered to be the fourth largest in the global pecking order, already has considerable exposure in infrastructure sector in form of holdings in Adani Power, Alstom Projects, Bhel, Gammon, GMR Infrastructure, NTPC, PFC, PGCIL, Tata Power, REC, NHPC, GVK Power and Jaiprakash Associates. It remains to be seen whether the sovereign wealth fund further hikes stakes in other portfolio companies as well.

“Norges Bank has been looking to beef up its India play. They usually award investment mandates to equity managers who focus on specialist mandates for a specific country or sector. These are for investments in listed equity and are long-only products. The typical initial funding for each manager ranges from $50-250 million,” said a top investment banker.

The sovereign wealth fund from the 5-million European nation, which is entirely built on revenues from oil and gas, on official counting at the end of 2009 had equity exposure to close to 250 India-listed companies. This number was around 220 at the end of December 2008, only 16 at the end of December 2007, around 60 in 2006 and nearly 70 in 2005 end, when Indian stocks first found in the fund’s equity portfolio.

kumarsroy@mydigitalfc.com

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