SWEDEN - Sjätte AP-fonden (AP6) has confirmed it has acquired Arvika Gjuteri, an iron foundry, after the firm was declared bankrupt last week.

AP6 confirmed the trustees had accepted the bid for the company, which has been undergoing a restructuring process since December, although the figure paid has not been disclosed.

Erling Gustafsson, chief executive of AP6, said the pension fund had purchased Arvika Gjuteri because it believes it is a "fundamentally good company" and despite its difficulties including a decline in demand, the foundry is "a company with great development potential".

The Sixth Swedish National Pension Fund is slightly different to the other pension buffer funds in that one of its objectives is to invest directly in small- to medium-sized growth companies, mainly in Sweden, to help development of Swedish industry.

At the end of 2008, the fund had SEK16.4bn (€1.57bn) in assets under management with 54% invested directly in companies and the remaining 46% in investment funds, with the holdings spread among its seven different sectors.

AP6 said while it is a long-term owner, its philosophy is to invest, develop and then sell its holdings at a profit, and confirmed the next step would be the appointment of a new board with "people from our industrial network".

The pension fund confirmed the foundry would be placed alongside its other investments in the manufacturing industry, which include holdings in Gnosjö Group in Småland and Lindab on Bjärehalvön in Skåne.

Gustafsson added despite the weak demand in the industry, the pension fund has a "long-term perspective and believe that the engineering industry has a future", while Arvika had demonstrated its capability of delivering high quality for demanding customers.

"When the cycle turns upwards, we are convinced that the demand for Arvika Gjuteri's products will increase," added Gustafsson.

The most recent investment confirmed by AP6 was a stake in the internet marketing company Admeta through the AP Partners Investment section of the pension fund in July 2008. (See earlier IPE article: AP6 takes joint ownership of Admeta)

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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