Norway's wealth fund removes Brexit uncertainty from UK property portfolio valuation

By Gwladys Fouche

OSLO, Oct (HKSE: 3366-OL.HK - news) 28 (Reuters) - Norway's $870 billion sovereign wealth fund, the world's largest, has removed the valuation risk premium it had placed on its British property portfolio following Britain's vote to leave the EU, it said on Friday when publishing its full third-quarter results.

The fund is one of Britain's biggest foreign investors, owning shares in most top UK companies and holding $11 billion in government bonds. It also co-owns Regent Street, one of London's premier shopping streets.

In August, the fund cut the value of its UK property portfolio by 5 percent, or 1.9 billion crowns ($230 million), prompted by external assessors reporting greater uncertainty in their valuation after the Brexit vote.

Some 23 percent of the fund's property investments were made in Britain and 16 percent in London alone at the end of the second quarter.

"In the third quarter, the normal valuation process for the fund's property investments in the UK was resumed," the fund said on Friday.

The report did not give a reason. But on Oct. 7, when the fund published preliminary third-quarter results, it said the uncertainty in the valuation of the portfolio at the time of the Brexit vote had disappeared.

In the third quarter, the fund bought a 59,000 sq foot office and retail property on Oxford Street, London's prime shopping street, for 124 million pounds, the report said.

In terms of stocks, the fund's three biggest company holdings in the third quarter were Nestle (Swiss: NESN.VX - news) , Apple (Swiss: AAPL-EUR.SW - news) and Shell (LSE: RDSB.L - news) . In the second quarter, it was Nestle, Shell and Apple (NasdaqGS: AAPL - news) .

The fund participated in 31 initial public offerings in the third quarter, including in technology firms Nets and LINE, financial services firms China Merchants (HKSE: 0133-OL.HK - news) Securities and First Hawaiian (Frankfurt: 1HI.F - news) .

In terms of fixed income, U.S. Treasuries, Japanese government bonds and German bonds remained the fund's top three bonds holdings between the second and third quarter.

($1 = 8.2662 Norwegian crowns) (Editing by Toby Chopra)