National Development and Social Fund replies to media reports
The National Development and Social Fund (“NDSF” and “Fund”) refers to the reports in the media which cast doubt on the legality of the acquisition by the NDSF of the Nil Paid Rights issued to UniCredit S.p.A. as part of the €150,000,000 rights issue by Bank of Valletta p.l.c. (BOV).
The NDSF would like to state that on 1 December 2017 it had issued a Media Release to announce that it had acquired the Nil Paid Rights issued to UniCredit S.p.A. and that this investment was a long-term investment that would form part of NDSF’s long-term Directed Investment Portfolio, and will result in the Fund acquiring around 2.91% of BOV’s total shareholding. This Media Release was issued a week after the transaction was completed.
The investment proposal received from UniCredit S.p.A., which was considered and approved by the Board of Governors, falls within at least three of the functions and duties of the NDSF as laid out in S.L. 497.12, namely:
a) to contribute to major projects of national importance;
b) to support enterprise and business in improving its competitiveness; and
c) to undertake initiatives for the benefit of future generations.
Moreover, the overarching objective of the investment policy of the NDSF, as articulated by the Board of Governors, is the preservation of capital with real expected returns over the long term. This equity investment by the NDSF in Malta’s largest investment grade-rated institution was considered by the Board of Governors to yield a relatively high return to the Fund in the current market environment, which will in turn contribute to the Fund’s sustained long term growth for the benefit of future generations.
The NDSF reiterates that it is accepted practice for sovereign wealth funds to hold equity investments in the leading corporate entities of their own countries.
Furthermore the NDSF would like to clarify that, by virtue of the founding regulations, it is required to publish its audited accounts on an annual basis and shall report to the Minister responsible for Finance on its activities not less than once a year. The same regulations provide that the Fund is subject to being audited by the Auditor General and that the audited accounts and the annual report of the Fund shall be laid on the table of the House of Representatives. The Fund is therefore committed to high standards of transparency and accountability.
The National Development and Social Fund is a government agency established for the purpose of managing and administering seventy per cent of the contributions received from the Individual Investor Programme of the Republic of Malta set up by virtue of the Malta Citizenship Act Cap.188.
The offices of the NDSF are situated at 46, West Street Valletta, VLT 1531, Malta.