SWEDEN – Swedish state pension fund, AP6, is to merge one of its business units, Industrial Equity, with Swedish private equity outfit, Nordico Invest, to create a new venture fund for medium-sized companies in the Nordic region.

The venture, named Nordico Equity, will start with an initial SEK1.5bn (e160m) in managed capital.

The Sixth AP Fund will be one of the lead investors in the fund, along with Swedish union, KF, and Bank of America Equity Partners.

Other investors in the fund include Sweden’s AP4 Fund, FöreningsSparbanken, Sirius International, Lantmännen (the Federation of Swedish Farmers), SLR (the Swedish Farmers’ Supply and Crop Marketing Organization) and KP Pension & Försäkring.

Jan Ohlsson, CEO of Nordico Invest, is to be appointed CEO of the new venture, heading a management team of 11 staff from offices in Stockholm and Gothenburg.

Ohlsson comments: “Nordico Equity will be in an excellent position to take advantage of all the investment opportunities offered by medium-sized companies with growth potential that are in need of capital and active owners. The fund will have a serious and long-term lead investor in the Sixth AP Fund.

“The merger is also an important step in the consolidation of the relatively young private equity sector in Sweden. With strong investors behind us we intend to continue to take an active part in the restructuring of this sector.”

Erling Gustafsson, CEO of the Sixth AP Fund, adds: “The Sixth AP Fund will generate return on the fund’s pension capital by active investments in growing small and medium-sized companies. Through our involvement in Nordico Equity, we are gaining a new and important channel for investing in medium-sized growth companies. At the same time, we are creating a long-lived player in the intermediate segment of the venture capital sector.”