Norway bets on Spain

Since the Norwegian Ministry of Finance redefined the fund’s investment strategy in 1997, allowing it to allocate 40% of its assets to investments in equities, Spain and its companies have been one of the main destinations for the fund’s investments in Europe. Unlike our main European neighbours, the Norwegian fund’s entry into Spanish companies was timid, with an investment barely surpassing $200 million (spread among 34 companies) in 1998.

For its initial foray, the fund plumped for multinationals well-established in Spain and with a strong presence in Latin America. Essentially, these were financial institutions such as BBVA and Banco Santander, and energy companies such as Endesa and Gas Natural. Prominent among the first batch of investments in Spanish companies were Telefónica, in which the fund initially invested nearly $38 million, and BBVA and Endesa, in each of which it invested more than $22 million.

During the first few years of the twenty-first century, the fund’s play on Spain and its companies grew continuously, reaching $1.1 billion in 2003. In that year, the fund’s plays were still headed up by Telefónica, and the main investments were still being channelled into financial institutions and energy companies.

However, companies from other sectors were beginning to make their appearances, such as Altadis (the result of the merger between Tabacalera and France’s Seita in 1999) with an investment of nearly $106 million, Inditex and construction companies such as ACS, with investments of close to $50 million. At the onset of the financial crisis, the fund kept its faith in Spanish companies, and in 2008 it invested $5.63 billion in 83 different Spanish companies, for the first time surpassing its investment in Italian companies, with Spain thus becoming the fund’s fifth biggest European investment destination.

In 2009, the fund’s stock of investment in Spanish companies reached a new new record, surpassing $9.2 billion and becoming the second biggest year behind last year’s $9.99 billion. In 2010 and 2011 the fund considerably reduced its exposure to Spanish equities, bringing its stock down to less than $7.5 billion. Also, in 2011 the fund granted an investment mandate to the Spanish firm Bestinver Gestión. With this mandate, the NBIM not only entrusted to Bestinver the management of a substantial part of its Spanish portfolio, but also charged it with overseeing the fund’s investments in listed Spanish mid-caps.

In 2012 the fund regained its appetite for Spanish equities and again reached $8 billion in investment, in Banco Santander, Telefónica and BBVA, each with investments of more than $1 billion. There were also significant investments in R&D&I-intensive companies such as Amadeus, with more than $173 million, and Grifols, with $140 million.

This shows the Norwegian fund’s interest in investing beyond the usual suspects: financial, construction and energy. In 2013 the GPFG increased its investment in Spanish equities by 20.1%, from $8.32 billion in 2012 to $9.99 billion in 2013. In total, at the end of 2013, the Norwegian fund had investments in 73 listed Spanish companies, compared with 69 in 2012. Within the IBEX 35 the main investments continue to be concentrated in Banco Santander (€1.245 billion), Telefónica (€952 million) and BBVA (€840 million). However the only one of these in which the fund increased its stake relative to 2012 was BBVA (up by 0.8%).

These multinationals are followed by others such as Inditex (€651 million), Iberdrola (€471 million) and Repsol (€272 million). The fund increased its investments in these three relative to 2012. However the fund did not confine itself to the usual suspects in the IBEX 35, but took positions beyond them. For example, it made a strong play on Gamesa, one of the stocks that has performed best so far in 2014, increasing its investment by 3,150%. Today, GPFG owns 2.58%, which represents the largest equity holding (relative to the market capitalization) within Top 20, followed by Ferrovial or DIA (it controls 1.92%) and Telefónica (1.73%).

It also bet on financial institutions such as Bankinter and CaixaBank, reaching €67 million and €97 million of investment respectively, and Mapfre, which has a strong presence in Latin America, in which its investment increased by 102.2% compared with 2012. Furthermore, the fund also took a position in the group resulting from the merger of Iberia and British Airways, IAG, in which it invested €100 million.


About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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