SOFAZ to lift its cap on investment in stocks

The State Oil Fund of Azerbaijan (SOFAZ) aims to soon lift its cap on investment in stocks, including private equity, from 15 percent to 25 percent, SOFAZ Deputy CEO Israfil Mammadov said in an interview with The Nikkei Veritas.

SOFAZ had $33.7 billion in assets under management at the end of June, of which bonds and short-term financial instruments made up roughly 80 percent.

He added that SOFAZ plans to increase the share of its portfolio devoted to real estate to 10 percent from the current 5.5 percent.

SOFAZ acquired Kirarito Ginza, a shopping mall in Tokyo's ritzy Ginza district, from Japanese leasing giant Orix last year for 52.3 billion yen ($496 million at current rates).

"SOFAZ has also invested in funds involved in Japanese real-estate development, including logistics facilities and properties in outlying cities,” Mammadov said.

According to the message, SOFAZ's assets swelled 24-fold in dollar terms in the decade since 2006, though the pace has slackened since 2012. With the slump in crude oil prices, the fund is being forced to add more risky assets to its portfolio.

SOFAZ was established in 1999 with assets of $271 million.

Based on SOFAZ's regulations, its funds may be used for construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems.

The main goals of the State Oil Fund are accumulation of resources and placement of the Fund’s assets abroad in order to minimize the negative effect on the economy, prevention of "Dutch disease" to some extent, promotion of resource accumulation for future generations, and supporting current social and economic processes in Azerbaijan.