As the capital city of Norway, it is only natural to find the pillars of the finance community here: the largest banks and insurance companies, Oslo Børs, Norges Bank, financial organizations, and top-rated business universities. But Oslo is also home to one of the world’s largest sovereign wealth funds, a specialized shipping finance community, and the largest power derivatives market.
DnB NOR dominates the industry as the nation’s largest financial services company. The banking giant is the result of the 2003 merger between Den norske Bank and Gjensidige NOR. It is headquartered at Aker Brygge in the heart of Oslo’s commercial financial district. Storebrand, the Nordic region’s leading provider of life insurance and pensions, is located in Lysaker.
Government Pension Fund
The other financial powerhouse is the Norwegian Government Pension Fund Global. The fund is the investment vehicle for the country’s surplus oil revenue, placing its money in equities and bonds outside Norway on behalf of the country’s future pensioners. The fund is currently worth NOK 2.6 trillion, making it one of the world’s largest sovereign wealth funds.
The fund draws international attention in the financial community not only for its sheer size, but also for its ethical investment strategy and good corporate governance. The fund is managed by Norges Bank Investment Management (NBIM), which also manages the major share of Norges Bank’s foreign exchange reserves and the Government Petroleum Insurance Fund. NBIM has 249 employees spread throughout its offices in Oslo, London, New York and Shanghai, 32% of which are non-Norwegian nationals.
“Over the years, we have recruited many Norwegian candidates and offered them a unique training and experience in a global asset management business,” said Vidar Korsberg Dalbø, NBIM Communication Adviser. “We certainly see a much greater attraction for NBIM among candidates today than we did some years ago, which is partly due to the fund’s growth and partly the competitive landscape. Almost half of the fund’s new leader group is foreigners.”
In addition to NBIM there is Folketrygdfondet, which manages the Norwegian Government Pension Fund’s investments in Norway and other Nordic countries. There are 45 people helping manage its NOK 117 billion portfolio of investments. It is much smaller than the Norwegian Government Pension Fund Global, but stands out as a major investor in the Norwegian market.
|© Norges Bank
Norway’s private equity community is also a significant investor in the Nordic market. The country’s private equity market dates back to the mid 1980s. Since then, the country has grown to become the second largest venture capital player in the Nordic region after Sweden, with more than EUR7 billion in total capital under management by the Norwegian based management companies.
The largest of these is Oslo-based Herkules Capital, previously known as Fred Equity Partners, with a total capital base of NOK 12.25 billion. Herkules targets companies located in the Nordic region, primarily in Norway. It recently raised NOK 6 billion (EUR700 million) in the largest fund ever by a Norwegian private equity company.
There are many other big Norwegian private equity companies located here, such as, FSN Capital, HitecVision, Northzone Ventures, Norvestor Equity, Reiten & Co, and Verdane Capital, the Nordic market’s largest independent manager of secondary direct funds. They are all members of the Norwegian Venture Capital and Private Equity Association (NVCA).
Oslo has successfully combined its position as the country’s finance capital with its expertise within shipping and energy. There are close to 1,000 viable maritime companies and one of the most complete maritime clusters in the world.
Some of the financial service companies serving this market are DnB, one of the largest companies within ship finance, marine insurer Skuld, which provides protection and indemnity (P&I) and defence cover to shipowners and charters, and ship brokers RS Platou.
What’s noteworthy is the number of Norwegian banks that have based their shipping banking activities in Oslo even after being taken over by foreign banks. Fokus Bank, now part of Danske Bank, has its main branch in shipping and offshore in Oslo. Likewise, Nordea has run the group’s shipping, oil services and international banking activities out of Oslo after Norway’s Christiania Bank was sold to MeritaNordbanken (now all part of Nordea).
“The simple reason for that was that we had 60% of (Nordea’s) total loans in Christiania Bank,” said Carl Steen, Nordea Head of Shipping, Oil Services and International Banking. “When you look at Norway and Oslo as a maritime capital, it was a natural consequence that it be placed here.”
Nordea is the world’s leader in syndicated loans to the shipping and offshore industries, followed by DnB. In 2008, Nordea acted in a lead capacity role for approximately EUR22.9 billion of new syndicated loans. In shipping lending, it ranks sixth in the world.
Oslo Børs has a large proportion of energy related and shipping equities represented in its listings. Energy equities alone make up about half the market value of all listed companies, followed by industrials (which include shipping companies) with 11%. There are a number of foreign companies listed within these sectors, such as Dutch company Fairstar Heavy Transport and Cyprus based Deep Sea Supply.
Oslo is also home to Nordpool, the world’s largest power derivatives exchange and among Europe’s largest carbon exchanges for trade in EU emission allowances (EUAs) and Certified Emission Reductions (CERs), as well as Imarex. Its subsidiary International Maritime Exchange ASA is the world’s only regulated market for freight and bunker fuel oil derivatives.
|Carl Steen, Nordea Head of Shipping, Oil Services and International Banking.