Norway’s $1.4T Sovereign Fund Closing Shanghai Office in Shift to Singapore

Norges Bank Investment Management has begun the process of closing its representative office in Shanghai, as the overseer of Norway’s sovereign wealth fund continues to build up its Singapore branch as a hub of activity for all of Asia.

The decision to shut the office is an adjustment driven by operational considerations and does not affect investment strategy or investments in China, according to NBIM. But the move comes at a time when several large pension funds and sovereign investors have scaled back plans in Asia’s biggest economy.

The manager of the Nordic nation’s $1.4 trillion-plus pension fund opened its Shanghai office in November 2007 and currently has eight staff there, it said in a release. At the end of 2022 the fund was invested in 850 Chinese companies with a total value of $42 billion.

“We will ensure that the closing process is conducted in an orderly manner for all affected persons at the office and in line with local requirements and procedures,” NBIM said.

Lion City Hub Grows

NBIM opened the Singapore outpost in 2010 as the fund’s second office in Asia and fifth worldwide. Described then as a “good supplement” to the Shanghai office, the Lion City hub has grown to supervise all operational functions in the region, including for China, under the leadership of portfolio manager Sigmund Kyrdalen.

The sovereign fund made its first foray into Asian real estate in 2017, buying a majority stake in a set of five retail and office properties in Tokyo for JPY 92.75 billion (then $823 million) under a joint venture with Japan’s Tokyu Land Corporation.

In March 2020, NBIM announced an agreement to acquire a 39.9 percent interest in a portion of the Otemachi Park Building, a Tokyo office complex, for JPY 79.7 billion (now $540 million) under a JV with Mitsubishi Estate. The property in the Marunouchi commercial district comprises 72,744 square metres (783,010 square feet) of office space, 1,544 square metres of retail space and 14,140 square metres of serviced apartments.

NBIM invests on behalf of the Government Pension Fund Global, which deploys Norway’s horde of surplus oil revenue and ranks as the largest sovereign wealth fund in the world, according to tracker SWFI. The fund reported a negative return of 14.1 percent for 2022, a year marred by war in Europe, high inflation and rising interest rates, CEO Nicolai Tangen said in January.

Tapping the Brakes in China

Mingtiandi reported in May that two of Canada’s biggest pension funds, Ontario Teachers’ Pension Plan and British Columbia Investment Management Corp, were pausing mainland China investment amid rising tensions between Beijing and Ottawa. Ontario Teachers’ and BCI invest in Asia real estate through their respective Cadillac Fairview and Quadreal property arms.

A third Canadian pension fund, Ivanhoe Cambridge parent Caisse de Depot et Placement du Quebec, is closing its Shanghai office and has stopped making private deals, according to a June article in the Financial Times. The FT had reported in February that Singapore sovereign fund GIC was reducing private investments in China amid Beijing’s tech crackdown and the country’s property market turmoil.

At least one sovereign investor is resisting the chill wind: Abu Dhabi’s Mubadala Investment Company, which opened a Beijing office this month amid warming ties between China and the Gulf Arab states, Reuters reported.