US specialist investment consultancy firm New England Pension Consultants (NEPC) has beaten a field of some of Europe’s biggest consultants to become the adviser to Sweden’s e2.3bn AP7 fund for a tender worth around e180m in hedge fund and private equity assets, according to sources close to the deal.
NEPC, an employee-owned, full-service investment-consulting firm based in Cambridge, Massachusetts has been operating for around 15 years and services over 155 retainer clients with total assets in excess of $270bn.
The firm triumphed over a shortlist of six consultants that included Watson Wyatt, William Mercer, Stockholm-based Wassum in conjunction with Hewitt Bacon & Woodrow and specialist UK private equity firm Campbell Lutyens.
AP7’s move into hedge funds/private equity is being seen as a test exposure to hedge funds/private equity in Sweden. Daniel Barr, chief analyst at AP7 told IPE that the role of the consultant will be twofold, looking at both implementation issues as well as assisting in the manager search by putting together the RFPs and carrying out due diligence and reporting with the fund.
AP7 has already asked for expressions of interest from managers to run a hedge fund of funds with a balanced multi-strategy approach and a global private equity exposure that includes both venture and buy-out allocations.
Barr says the alternatives strategy is very much a core investment approach and says AP7 is not looking for undue risk from the exposure.
“The board has decided to make a preliminary change in the asset allocation giving four percent in hedge funds and four per cent in private equity.
AP7 runs two funds, one for default choices in the PPM and another for those that select AP7 as their investment choice.
The former, Barr says, will get a four per cent allocation to each new asset class, while 8% in the selectors fund will be invested solely in private equity.
Barr points out that one of the issues to be discussed with the newly appointed consultant will be the number of private equity managers that the fund may take on: “In the private equity sector you will probably be committing money every year so that will mean more funds under way, but it is something we have to look at.”





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