SWFs and Investment Disclosure

While SWFs generally have been criticized for a lack of transparency, a few SWFs are quite transparent, and even disclose more than host country regulators require them to disclose.  The best example of this is–no surprise to SWF watchers–Norway’s Government Pension Fund-Global (GPF-G).

My research assistant and I have compiled SEC data on 13D and 13G transactions (involving investments of more than 5% of a class of a company’s outstanding securities), and the following list of GPF-G investments is striking:


The investments in yellow–the majority of GPF-G’s filings–were not required to be disclosed (although perhaps some were above the 5% disclosure level at some point).  So why would GPF-G disclose?  For one thing, Norway has very little to lose.  They have a reputation for being transparent and apolitical (at least with respect to US investments).  To the extent they are “activist,” they are activist in the same way that CalPERS or a public pension fund might be: focused on environmental, social or governance issues, and not on activism that might create national security risks.

On the other hand, the unintended (but not unexpected) consequence of disclosure for many other funds is heightened public and political attention to their investments, and that attention can create political problems (see Dubai Ports) that harm both the investor and the host country.  I am not advocating non-disclosure, but simply calling attention to the fact that equity investment decisions are very context-specific.  Which host country, which company, which industry, which SWF, how much to invest, what kind of security to take–all of these factors go into the mix, and affect how and why deals get done and investments get made.  Most SWFs simply would not be able to do what Norway does in the United States because, well, they are not Norway.  So many choose to invest under the radar, with very small stakes, and to stay out of the papers as much as possible.


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