Over the last 20 years, several leading finance companies have based themselves in Stavanger to create the second largest fund management community after Oslo with more than NOK 105 billion (USD 15 billion) in capital under management. On top of that, private equity companies here have amassed NOK 10 billion in committed capital towards seed, venture capital and buy-out opportunities. The driving craft behind this has been Norway’s immense oil and gas wealth.
The biggest fund mangers in the region are Skagen Funds, Statoil Kapitalforvaltning and SR-Bank Forvaltning. Skagen is the largest with NOK 57 billion in total capital under management, followed by StatoilHydro, which manages a NOK 30 billion employee pension fund and a NOK 13 billion insurance fund, and SR-Bank with NOK 5.5 billion.
Acta, which sells funds such as Skagen’s, oversees NOK 89 billion in assets under management, NOK 57 billion of which is from Norwegian customers. Acta was first established in Stavanger back in 1990 and has since grown to become the leading independent financial advisor for the Nordic savings market with 50 offices in Norway, Sweden and Denmark. Acta offer mutual funds, real estate, infrastructure, private equity, shipping and renewable energy investment opportunities.
Sparebank I SR- Bank, formerly known as Sparebank Rogaland up until about two years ago, is the largest regional savings bank in Norway with NOK 110 billion in managed capital and 1,130 employees. The bank includes 39 former local savings banks spread across Hordaland, Rogaland and East Agder. Without a doubt, petroleum has been the source of its massive growth.
“If you look back on our history dating back to 1839 in Egersund, the bank was founded on the fishing industry, which was then our most valuable raw material,” added Thor-Christian Haugland, Sparebank 1 SR-Bank Executive Vice President Capital Markets. “The second raw material was oil and gas and has given us much more than fish. The third is the money as a result of the oil and gas.”
The financial industry is responsible for the strongest increase in wealth creation in Norway after oil, according to a 2008 report on the Norwegian financial industry by Norwegian research foundation FAFO. The report found that the added value during 2000-2006 had grown even more than in Denmark and substantially more than in Sweden. Rogaland employs 3,100 people within the financial sector.
||Sparebank 1 S-R Bank, the largest regional savings bank in Norway, has grown to NOK 110 billion in managed capital thanks to Stavanger’s vast petroleum wealth.
© Sparebank 1 S-R Bank
The other link between oil and money can be found in Stavanger’s private equity community. The major private equity companies here were started by oil veterans and are focused on energy investments. Some of them have even established offices in the other international petroleum capitals such as Houston and Aberdeen, such as HitecVision.
HitecVision has its roots as an oil service company, but has grown to become the second largest private equity company in Norway with USD 1.2 billion in committed capital. Jon Gjedebo started Hitec in 1973 selling instrumentation to the petroleum industry in Stavanger. The first private equity fund was launched in 2002, solely to Norwegian investors.
Its latest and largest fund, HitecVision V (2008), has a committed capital of USD 816 million and attracted 52% participation among foreign investors. The fund targets control buyouts and growth capital investments in the international oil and gas sector. To date, HitecVisionV has invested in Spring Energy Norway, an oil and gas company, and Hitec Products Drilling, a provider of advanced, customized drilling solutions and well intervention systems for the offshore oil and gas industry.
“The private equity community in Stavanger is more internationally oriented than the Norwegian private equity industry in general,” said Pål Dahlberg, Hitec Vision CEO. “This is a reflection of the international outlook of the local industry. That’s what companies here do. They serve oil companies globally.”
Oil veteran Ole Melberg, the former CEO of Norwegian drilling company Smedvig, manages Energy Ventures, a venture capital company with NOK 2.3 billion in committed capital divided over three funds. The company targets mainly hi-tech oil service companies based in the North Sea or North America, but also considers environmental technology companies. Its latest fund, for example, recently invested in Energreen, a local Sandnes-based company with a technology that generates clean energy from pressure drops in fluid process systems.
Other Stavanger private equity companies include Såkorninvest, the only seed fund (i.e. early funding which enables a project or idea to develop into a business); Procom Ventures, a “speed seed” fund; and Progressus, which operates within expansion and internationalization. The Norwegian Private Equity and Venture Capital Association (NVCA) estimates the Stavanger private equity industry has around NOK 10 billion in total committed capital.
Putting Stavanger on the Map
The finance community in Stavanger has been working together to create an educational competence within finance by supporting an academic economics department at the University of Stavanger. Skagen, SR-Bank, HitecVision, Sandnes Sparebank and GE Money Bank have contributed NOK 20 million to the university to create a masters programme in applied finance, starting in the fall of 2008. The university has pledged to match this amount over a five-year period.
“Today the finance industry is where the petroleum industry was in the 1970s,” added Sveinung Hestnes, Chief Information Officer at Sparebank 1 SR-Bank. “This industry has great potential. When the oil has been pumped out of the North Sea and converted into cash it has become another raw material to be husbanded. The key to it all is competence which we can contribute to maintaining the prosperity that has been created in this region.”
||HitecVision chief operating officer Pål Dahlberg says the new Masters in Applied Finance at the University of Stavanger will help put Stavanger on the map as a finance centre. HitecVision is the second largest private equity company in Norway.