New CEO Takes Over Norwegian Oil Fund

Norway's Government Pension Fund Global, the largest sovereign wealth fund in the world, got a new head on September 1, former billionaire hedge fund manager Nicolai Tangen.

Tangen has assumed the role of CEO of Norges Bank Investment Management that manages the $1.2 trillion fund, set up 30 years ago to store revenues from Norway's oil industry for future generations. The 54-year-old previously led investment firm AKO Capital, which he founded in 2005.

The announcement that Tangen would replace outgoing CEO Yngve Slyngstad in March sparked controversy, as originally the hedge fund manager was intending to keep his interests in AKO Capital, raising concerns about conflicts of interest. However, Tangen later agreed to permanently transfer his holdings and dividend rights from AKO Capital to the hedge fund's charitable foundation.

Tangen 's shares in AKO were valued at kroner 10bn ($1.14bn), and he has also agreed to shed some private investments, leaving him some kroner 7bn in the bank. He has given these things up for what he describes as his dream job.

"I want to be CEO of the oil fund, and have only one objective: Creating wealth for future generations," he said last month.

Tangen's move from the UK to his native Norway will cost him more in wealth tax than his annual salary at the fund of kroner 6.65mn ($760,000). He will have a five-year term at the fund that can be renewed once.

Tangen is taking the helm of the oil fund at a tumultuous time for financial markets and the global economy. Norway had to withdraw $41bn from the fund earlier this year to cover a rare budget deficit, caused by the steep fall in oil revenues and extra spending to protect jobs and industries from the fallout of the coronavirus pandemic. Norway expects to have to withdraw more from the fund before the crisis is over.

The fund reported some $21.3bn in negative returns in the first half of the year, which Norges Bank attributed to "major fluctuations" in equity markets.

"The year started with optimism, but the outlook of the equity market quickly turned when the coronavirus started to spread globally," the bank's deputy CEO Trond Grande explained last month. "However, the sharp stock market decline of the first quarter was limited by a massive monetary and financial policy response." 

Tangen will also have a hand in the fund's investment policy vis-a-vis oil and gas. European financial firms have come under increased pressure in recent years to divest from hydrocarbons. The oil fund decided in May to blacklist four Canadian oil sands producers because of their greenhouse emissions – the first time this has been used as a reason for excluding companies on ethical grounds.