It wasn’t that long ago that Norway’s Petroleum Fund (now called the Norwegian Government Pension Fund Global) received the green light to begin investing in real estate for the first time. Now, the State Oil Fund of Azerbaijan (SOFAZ) is following suit.
In a recent state magazine article, executive director of the oil fund, Shahmar Movsumov, explained that SOFAZ had grown considerably since it was established more than a decade ago, and the $30 billion fund has now become a major source of funding for large-scale national strategic projects, such as the construction of the Baku-Tbilisi-Ceyhan oil pipeline. One of the main aims of the fund, however, is to reduce dependence on oil, hence the desire to move into non-oil sectors.
Responding to a question on key strategic priorities of SOFAZ’s investment programme for 2012, Movsumov said: “Recently, several amendments have been made concerning the rules of foreign currency asset management.
Consequently, SOFAZ’s investment spectrum had broadened considerably.” He noted that, according to its investment policies, the fund is now able to invest in new asset classes, such as real estate and gold.
Azerbaijan expects several important oil and gas streams to come online in the next five years, with those revenues flowing into SOFAZ. As a result, Movsumov said assets are expected to rise to $34 billion by the end of 2012. More impressively, he predicted that assets would reach $200 billion within the next 10 to 15 years.