In the new white paper on direct ownership in State-owned enterprises, the Norwegian Government asks for consents from the Parliament to reduce State ownership in several companies, including Telenor ASA, Kongsberg Gruppen ASA, SAS AB and Cermaq ASA, creating interesting business opportunities in Norway for foreign investors.

The white paper (Meld. St. 27 (2013-2014)) deals with the Norwegian State’s direct ownership in 55 enterprises.The State has a comprehensive ownership comprising amongst other of one third of the values listed on the Oslo Stock Exchange. The ratio between listed and non-listed state-owned shares is 35-65, while the total value of the shares held by the State amounted to approximately NOK 665 billion as of end of 2013.
Compared to previous white papers on state ownership, where focus has been to maintain extensive State ownership, the new Government’s proposal represents a clear change of direction. It is stated that private ownership should be the principle and that state ownership must be justified specifically.

Categories of companies
In the white paper, the State’s ownership is divided into four categories:

CATEGORY 1
Companies in which the State has a sole investment purpose
The Government will ask the Parliament for authorisations to sell, in part or full, the State’s shares in all
companies in this category (see list of largest companies in the table below).

CATEGORY 2
Companies in which the State, in addition to its investment purpose, also considers State ownership a key to maintain main headquarter functions in Norway

Proposals will also be made for authorisations to reduce the State’s ownership in Kongsberg Gruppen ASA and Telenor ASA down to 34 percent. By maintaining a shareholding of 34%, the State can ensure that the companies remain in Norway. Further, there are reasons to believe that the Government in the next years
will consider also a sale of shares in Statoil ASA.

CATEGORY 3
Companies in which the State has other more specific defined purposes with its shareholding, e.g. the management of common natural resources

In this category few changes in State ownerships are expected. However, specific privatisation proposals could be made in respect of Posten Norge AS, NSB AS and Statkraft SF.

CATEGORY 4
Companies with sectoral policy objectives
This category includes companies in which the Government believes State ownership is well justified and where no changes are proposed in the period up to 2017.

Table of companies where changes to ownership structure is expectedCompanyCategory BusinessMarket value (MV) or equity value (EV)State ownership Cermaq ASA 1 – Sell Fish farming MV: MNOK 9 900 59.17% Entra Holding AS 1 – Sell Properties EV: MNOK 7 878 100% Flytoget AS 1 – Sell Airport train EV: MNOK 968 100% Mesta AS 1 – Sell Construction and civil engineering of roads EV: MNOK 897 100% SAS AB 1 – Sell Airline MV: MNOK 5 128 14.3% Kongsberg Gruppen ASA 2 – Reduce to 34% Supply of high-technology systems to oil and gas industry, the merchant marine, and the defence and aerospace industries MV: MNOK 15 300 50.001% Statoil ASA 2- No sale consent requested, but ownership reduction expected Oil/gas MV: MNOK 468 731 67% Telenor ASA 2-Reduce to 34% Telecom MV: MNOK 219 304 53.97% NSB AS 3-Changes in ownership expected due to forthcoming railway reform Railway transport EV: MNOK 7 676 100% Posten Norge AS 3-Changes in ownership expected due to forthcoming regulations Post services EV: MNOK 6 050 100% Statkraft SF 3-Sale or listing expected Energy EV: MNOK 62 849 100%

Process
It is expected that at least the main proposals in the white paper will be sanctioned by the Parliament in November or December this year. In light of the next election to the Parliament taking place in 2017, it is expected that the Government will complete all relevant sales processes before summer 2017.

Investment in Norway at a glance

The Norwegian capital market. The capital market in Norway is to a large extent energy driven. Norway is the third largest exporting nation of gas, and fifth in the world when it comes to oil export. Companies within the energy sector represent 40% of the value of the Oslo Stock Exchange (OSE).

The bond market on the OSE has been by far the most attractive market for financial instruments in the Nordic countries in the period 2005-2013. During this period, 202 new companies have been listed on the OSE, compared to 74, 56 and 24 on the stock exchanges in Stockholm, Copenhagen and Helsinki, respectively. The companies listed on the OSE also raised more than three times the funds compared to companies on the other stock exchanges in the Nordic countries.

In 2012, Norway had the fifth highest rate of venture capital investments, relatively to its population.

Foreign investments. The largest share of foreign investments in Norway were made by Swedish investors (23%), followed by investors from the Netherlands (14%), France (8%), USA (7%), UK (7%) and Denmark (7%). In total, foreign investors hold shares representing 37% of the market value on the OSE

Company tax rate and audit. The general tax rate for individuals and companies was with effect from 2014 reduced to 27%, and the wealth tax to 1%, at the same time as the basic tax free allowance was increased to NOK 1 mill, and the inheritance duty was removed. There are also ongoing considerations to implement
additional net tax reductions.

Competition clearances. The thresholds for mandatory filing of mergers and acquisitions in Norway have recently been increased. Under the previous legislation, mergers and acquisitions had be notified to the Norwegian Competition Authority if the undertakings concerned had a combined annual turnover in Norway of NOK 50 million, and at least two of the undertakings had an annual turnover in Norway of NOK 20 million. From 1 January 2014 the thresholds were raised to NOK 1 billion for the combined turnover, and NOK 100 million for at least two of the undertakings.