Wires

UPDATE 2-Norway wealth fund CEO to step down after 12 years

Nerijus Adomaitis

* Yngve Slyngstad has been CEO since 2008

* He has overseen five-fold increase in fund's value

* Announces 1.6% return on investment in third quarter

* Says fund will not invest in Saudi Aramco IPO (Recasts with CEO resignation)

OSLO, Oct 30 (Reuters) - The chief executive of Norway's sovereign wealth fund announced on Wednesday he will step down after nearly 12 years, saying just days after the fund hit a record value that it was a good time for a leadership change.

Reporting a 1.6% return on investment in the third quarter, Yngve Slyngstad also told a news conference that the fund does not plan to invest in Saudi Aramco when the oil company carries out its long-awaited initial public offering (IPO).

Slyngstad, 56, has been with the fund for 22 years and has held the top job since January 2008. He invested heavily during the stock market meltdown soon afterwards and has overseen a fivefold rise in asset values while in charge.

He will take up a new job with the fund, based in London, where he will build a unit to invest in "unlisted infrastructure projects" such as wind power and other renewable energy.

The leadership change is likely to be "in a few quarters", he said.

"I'm not leaving, I'm taking a different role in the fund. I think it's a good time for the leadership change," Slyngstad told Reuters on the sidelines of a news conference. "Any day is an arbitrary day, but why not at this stage, when everything is aligned both in terms of the strategy and the size of the fund."

The world's largest sovereign wealth fund, which saves revenues from Norway's oil and gas industry for future generations, last Friday hit a record value of 10 trillion Norwegian crowns ($1.08 trillion).

But the fund has at times met political resistance, including over moves to diversify away from oil - parliament rejected its 2017 proposal to divest all oil and gas stocks.

In the end, the initiative was watered down to only include a sale of pure-play upstream explorers, leaving integrated oil majors such as Exxon Mobil Corp, BP Plc and Royal Dutch Shell in the portfolio.

Slyngstad said the interference was not a reason for his resignation.

"No, we have a clear mandate from the Ministry of Finance, it's very well defined what our role is. It's well defined by the board of how we are going to execute the strategy plans which update regularly, so my role first of all is execution," he said.

Finance Minister Siv Jensen said in a statement to Reuters: "He has done a tremendous job, delivering results that will benefit us all for a long, long time."

Central bank Governor Oeystein Olsen, who will lead the process of recruiting a replacement, said political interference comes with the job.

"I think it's a strength to operate that kind of fund in a democracy with our kind of politicians. They've made good decisions over the years, and deserve credit for the overall management of the fund," Olsen said.

THIRD-QUARTER BOOSTED BY U.S. INVESTMENTS

The fund made a 1.6% return on investment in the third quarter, earning 236 billion Norwegian crowns ($25.55 billion), it said earlier.

"Equity and fixed income investments had another quarter with positive returns," Slyngstad said. "We saw a particularly positive contribution from U.S. treasuries and North American stocks, which returned 4.6% and 2.9% respectively."

The return for the quarter was in line with the fund's benchmark index, it said.

With a population of less than 5.4 million, the Norwegian fund's quarterly return works out at almost $4,800 per citizen.

It invests Norway's oil and gas revenue in foreign stocks, bonds and real estate, but investment in Saudi Aramco is not in its sights.

"Saudi Arabia is not part of our reference index," Slyngstad said.

The fund has some smaller investments in Saudi companies through an emerging markets portfolio, but a major company such as Aramco would not be a natural part of this portfolio, he said.

The fund's largest fixed-income holdings are in U.S. government bonds.

It owns stakes in more than 9,000 companies globally, with its biggest holdings in tech giants Microsoft Corp and Apple Inc, followed by Switzerland's Nestle SA , Google parent firm Alphabet Inc and Amazon Inc. ($1 = 9.2271 Norwegian crowns) (Writing by Terje Solsvik, additional reporting by Lefteris Karagiannopoulos, editing by Jason Neely and Timothy Heritage)