​SOFAZ increased foreign managers

Azerbaijan, Baku, April 17 / Trend I.Khalilova /

According to the consolidated statement of the financial activities of the State Oil Fund audited by Ernst & Young, released on Wednesday, the State Oil Fund of Azerbaijan (SOFAZ) chose State Street Global Advisors (SSGA) and Union Bank of Switzerland (UBS) as its investment managers, thereby increasing the number of its foreign managers to five.

'The agreements with the new managers were signed in 2012 before that the fund's assets were managed by Deutsche Asset Management International GmbH, Credit Suisse and the International Bank for Reconstruction and Development (IBRD belongs to the World Bank Group)', the statement says.

According to the agreements, the financial institutions manage SOFAZ assets in accordance with its general investment rules.

In 2012, as in the previous year, SOFAZ continued to keep its assets at the Bank of New York Mellon, where it holds the purchased securities.

According to the rules of SOFAZ, the credit rating of the Fund's foreign manager or its principal founder should not be below an investment grade (Standard & Poors, Fitch or Moodys), or it should have positive experience in asset management either for at least a five-year period or at the minimum cost of $5 billion.

SOFAZ may hand over to foreign managers the management of a maximum of 60 per cent of its investment portfolio, but one manager cannot gain control over more than 15 per cent of the total value of the portfolio.

The basic indicator (benchmark) to determine the profitability of the fund's assets in the investment fund (excluding the costs of portfolio management) is the rate of the three-month LIBOR, published by the Association of Banks of the United Kingdom.

SOFAZ was established in 1999; its assets amounted to $271 million.

SOFAZ's assets comprised about $34.326 million as of April 1, increasing by 0.6 percent compared to the beginning of the year (over $34.129).

Based on SOFAZ's regulations, the funds may be used for the construction and reconstruction of strategically important infrastructure facilities, as well as solving important national problems. In 2001-2009 special attention was drawn to the development of the oil and infrastructure sectors, as well as the non-oil sector of the country. At the moment, a number of important projects in
irrigation and transportation are financed at the expense of the funds.

The main purposes of the fund are: accumulation of funds and placement of the fund's assets abroad to minimize the negative impact on the economy, preventing a "Dutch syndrome" to ensure savings for future generations and to maintain the current socio-economic standard in the
country.

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