Sweden opens door to unlisted direct investments for AP funds
Sweden’s four main state pension buffer funds could be granted permission to make direct investments, on top of a package of amendments already in the pipeline that are now set to take effect in January.
The country’s Council on Legislation (Lagrådet) on Thursday approved a final proposal for new investment guidelines for the AP funds from the Ministry of Finance.
This rubber-stamping paves the way for the government to present the proposed legislation to parliament before the summer.
Although the guidelines have yet to gain parliamentary approval, they are likely to go through as they have already been agreed by the cross-party Pensions Group.
In the proposal, the Ministry of Finance also announced a plan to analyse a series of other liberalisations to the mandate this autumn, with the resulting changes set to come into effect on 1 July 2019.
The changes – which are to be discussed by the Pensions Group – relate to direct investments in unlisted companies and loans.
The additional proposals follow a lengthy consultation on the revised mandate, during which calls came for the funds to be given the freedom to make unlisted direct investments.
Tobias Fransson, head of strategy and sustainability at AP4, told IPE that the second part of the investment liberalisation was an important complement to the set of changes now about to go before parliament.
“This will give the AP funds the ability to invest very long term, cost effectively and in line with international market practice,” he said.
Specifically, the Pensions Group will look into whether the AP funds should be able to make direct investments in unlisted infrastructure companies, make co-investments in unlisted shares, and invest in illiquid loans.
In addition, the politicians will consider whether the funds should be allowed to keep a stake of more than 10% when a company is listed.
The group will also consider whether the pension funds may provide loans to companies in which they have invested.
The new investment rules, which were first proposed last summer, allow the buffer funds more flexibility and will take effect on January 1, 2019.
Per Bolund, minister for financial markets, said: “The proposal includes permission for the funds to put a larger proportion of their assets outside the stock markets, while at the same time not having to have such a large portion invested in fixed-income securities.”
The revised mandate also includes legal requirements for the funds to be managed in an “exemplary manner” with regard to responsible investment and responsible ownership.