Norwegian sovereign wealth fund has raised its holding in Lanco Infratech by purchasing a further 0.6% stake for around Rs 89 crore ($20 million) from the open market. The sovereign fund already owned 1.17% in Lanco as of September 30.
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The Hyderabad-based infrastructure player firm has eight power stations across India including coal, gas, wind and hydro with a total installed capacity of 2082 MW and is looking to grow it over four-fold. Last month it beat short-listed bidders from China and Japan to buy Griffin Coal, the second largest coal mine in Western Australia, owned by the debt-ridden Griffin companies.
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Like most other business groups entering power generation in the country, Lanco plans to ship the coal back to India to fire its thermal projects. Control over natural resources gives an advantage for power firms in keeping a check on cost of raw feed.
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Money for Norway’s sovereign fund Government Pension Fund Global comes from the cash flow from petroleum activities, which is transferred from the central government’s budget besides the return on the Fund’s capital. This is one of the two sovereign funds of Norway, the other being Government Pension Fund – Norway that primarily invests in domestic companies.
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Said to hold assets worth half a trillion dollars, it is arguably the biggest sovereign funds in Europe. Earlier known as The Petroleum Fund of Norway, it changed its name four years ago. It is specially known for investing in companies with strict ethical norms including good corporate governance besides environmental and social practices.
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The fund has, in the past, publicly excluded certain companies from its pool of probable investment bets based on its ethical standards. These include global giants like EADS, BAE Systems, Boeing, Altria, United Technologies and Wal-Mart. It also has excluded India’s ITC(as it produces tobacco) and UK-based Vedanta Resources (environment & human rights abuses).
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Its investment strategy follows a strategic benchmark portfolio consisting primarily of listed equities and investment grade bonds. The fund had sometime back raised the targeted equity portion to 60% with a 5% cap on real estate.
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According to its website, the benchmark index for equities in the Government Pension Fund – Global comprises almost 7,700 companies across 46 countries, whilst the benchmark index for bonds comprises more than 10,000 individual securities across about 1,600 issuers in the currencies of 21 countries.
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In contrast the other sovereign fund has a narrower investment focus. The benchmark index for equities in the Government Pension Fund – Norway comprises 196 companies in 4 countries, whilst the benchmark index for bonds comprises 270 individual securities across 62 issuers in the currencies of 6 countries.