Norwegian Pension Fund Sheds Gaming Stocks from Portfolio

Posted on: June 4, 2019, 05:13h. 

Last updated on: June 4, 2019, 05:24h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Kommunal Landspensjonskasse (KLP), Norway’s largest pension fund, said it will ditch its investments in alcohol companies and casino operators as part of its ongoing effort to align its portfolio with environmental, social, and governance (ESG) investing principles.

KLP CEO Sverre Thornes said the pension plan decided, after talking with its members, to sell off its gambling and alcohol holdings in order to focus on investments that foster positive social development. (Image: KLP)

KLP, which is the pension plan for Norway’s public employees, manages over $80 billion in assets. In addition to its plans to divest stakes in alcohol stocks and shares of gaming companies, the Norwegian pension is parting ways with any investments related to adult entertainment.

Positions in casino operators and makers of adult beverages represented just $320 million of KLP’s assets under management at the end of May, but the pension scheme had positions in 90 such companies across the two industries – 40 producers of beer, liquor, and wine and 50 gaming firms.

Big Names

KLP’s casino gaming investments include some of the biggest US-based operators. The Norwegian pension manager will divest investments in Las Vegas Sands Corp. (NYSE: LVS), Wynn Resorts Ltd. (NASDAQ: WYNN), MGM Resorts International (NYSE: MGM), and Caesars Entertainment Corp. (NASDAQ: CZR). Those four represent the largest US casino companies by market capitalization.

Additionally, KLP will also sell investments in regional operators, including Boyd Gaming Corp. (NYSE: BYD) and Eldorado Resorts (NASDAQ: ERI). Eldorado is reportedly considering acquiring Caesars Entertainment.

The Norwegian pension fund’s departures from gaming stocks are not limited to casino operators. KLP is also divesting positions in real estate investment trusts (REITs) that own gaming properties that are leased to companies, such as Caesars and MGM Resorts. MGM Growth Properties LLC (NYSE: MGP) and VICI Properties Inc. (NYSE: VICI) are among the stocks KLP is selling.

After deep conversations with our customers and owners, we have decided to withdraw from alcohol and gambling, while at the same time ensuring that we still will not invest in pornography,” said KLP CEO Sverre Thornes in a statement.

The retirement benefits manager is also selling investments in two companies based in its home country – Norwegian Arcus and Gaming Innovation Group – as well as positions in providers of online sports wagering, including William Hill and Paddy Power Betfair.

Done It Before

KLP has previously taken ESG-friendly investment stances. Last month, the pension manager and its related funds said it will dump investments in coal producers and companies that “derive more than five percent of their revenues from coal-based activities.”

Five years ago, KLP divested interests in companies that generated at least half their revenues from coal-based activities, tightening that threshold to 30 percent in 2017.

Around the world, large pension managers are looking for more virtuous investments. For example, CalPERS, which manages retirement benefits for California public employees, started divesting its tobacco holdings in 2000. CalPERS and CalSTRS, the retirement fund for California, teachers have recently been revamping their efforts to apply ESG guidelines to investment portfolios.

Over the past several years, other pension plans and college endowments in the US have scuttled investments in coal companies and other producers of fossil fuels, civilian firearms manufacturers, and tobacco firms.