SWEDEN - Fjärde AP-fonden (AP4) one of the five Swedish pension system's buffer funds has confirmed it is participating in an offer for V&S Vin&Sprit AB, the Swedish state-owned wine and spirit firm which produces drinks brands including Absolut vodka.
In March 2007, the Swedish government announced its decision to reduce the amount of state-controlled companies and confirmed that it would reduce the state ownership of six companies, which included OMX - bought by Nasdaq in January - and V&S.
V&S, an unlisted company which had a net operating profit of SEK 2,024m (€216m) in 2007, revealed that the Swedish Parliament had authorised the government to sell its holding in V&S in June 2007, which led to a comprehensive analysis for the conditions of the sale by Morgan Stanley, which was completed in December, at which point an auction process was initiated allowing interested parties to submit bids for the entire company.
As a result, AP4, which has a fund capital of SEK 207.3bn at December 31 2007, has confirmed it is part of a bid submitted by the private equity firm EQT, and Investor AB - the largest industrial holding company in the Nordic region - to purchase V&S, although it declined to state the amounts involved.
In a statement Mats Andersson, chief executive of AP4, claimed the primary reason for becoming involved in "an investment of this kind" was to achieve a good profit, which would help enable the fund "to live up to those requirements the income pension system sets on us".
Andersson also pointed out AP4 already has a "long and positive business relationship" with EQT, and highlighted the fund "has confidence in EQT and Investor's ability to develop activities in a responsible and profitable way".
Although details of the bid have not been revealed, the Swedish government is aiming to sell its holdings in the six companies for around SEK 200m (€21m) between 2007-2010, in an attempt to reduce the central government debt to SEK1.005trn.
However, rules restricting the investments of the buffer funds mean that AP4 is not allowed to invest more than 5% of the fund assets in unlisted securities, although at the end of 2007 the fund had investments in unlisted shares and securities in both Sweden and foreign companies - including EQT - which were valued at just SEK 4.817bn.
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