AP4 and Folksam target corporate bonds and loans
SWEDEN - Fjärde AP-fonden (AP4), the Fourth Swedish National Pension Fund, has joined forces with Swedish insurer Folksam to invest in a vehicle targeting private corporate bonds and public corporate loans.
The co-investment vehicle Proventus Capital Partners received €150m in the first fund closing from its founder Proventus, a private investment company, and external investment from AP4 and Folksam - which owns 60% of KPA pension fund.
Proventus provides development capital - through investments in public corporate bonds, leveraged loans and private corporate loans - to mid-sized firms that need restructuring capital. But in an effort to take advantage of business opportunities in the "underdeveloped" market it has established the co-investment vehicle to attract external investors, starting with AP4 and Folksam.
Daniel Sachs, chief executive of Proventus, said: "The market for corporate bonds and corporate loans is underdeveloped and particularly interesting in light of the business sector's extensive refinancing and restructuring needs during the coming years."
Proventus Capital Partners, which opens to additional investor capital in the autumn, will focus on financing Nordic companies in need of capital for expansion, acquisition, restructuring or refinancing as well as investments in public high-yield bonds.
Sachs claimed the vehicle would take advantage of a "major investment opportunity, targeting capital needs that cannot currently be financed because of restrictive loan policies of banks and others".
He argued Proventus also aims to try and develop a more active bond market, as the sector needs to become more liquid and transparent if it is to be an efficient source of capital and attract potential investors.
"The bond markets' corporate governance structures and procedures are underdeveloped," said Sachs. "Many bondholders will find themselves in situations where activity is needed to protect their interests, but without the necessary tools. Too many bondholders have been squeezed between banks and equity holders in the last year and there is a need for active investors in this market."
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