ICELAND - Sixteen Icelandic pension funds have co-founded the Icelandic Investment Fund (Framtakssjóður Íslands) - so they may invest in domestic companies which show potential but have suffered in the financial crisis.
These founding pension schemes, which are all members of the Icelandic Pension Fund Authority (IPFA), between them control around 64% of the Icelandic pension funds' assets. Their representatives have committed to place around ISK 30bn (€163.7m) of capital into the IIF.
According to the IPFA, the IIF private equity fund will be used to "participate in and to shape the financial and structural renaissance of the Icelandic economy, in the wake of the recent collapse of its financial system".
Hrafn Magnússon, managing director of the IPFA, confirmed the IIF was established formally on 8 December 2009, when seven representatives were elected as board members of the fund. The first official board meeting will be held today (11 December), tasks will be divided up, and it is expected the position of chief executive will be advertised shortly.
In the meantime, registration for stocks in the fund are still open, and the IIF is aiming to "build up powerful companies which have the possibility to become leaders in their respective fields, and at the same time give its investors a good rate of interest".
The IPFA also confirmed that the fund will be allowed to invest abroad in certain circumstances; this includes the marketing of Icelandic companies.This will also be an option "if there is a possibility of unification or a merger with Icelandic companies that are owned by the fund. The fund will participate in investments which contribute to optimisation or the merger of companies".
It is anticipated that the IIF will invest its capital over the next three years and will be in operation for a total of seven years. The fund will set itself a shareholder policy, which will incorporate the UN's Principles for Responsible Investing, and the board will create an investment policy for the fund following a review by a special council of 12 advisers, who will be appointed by shareholder recommendation.
The IIF was originally expected to be established last month, however the start date was temporarily delayed to allow pension funds more time to decide whether or not to participate. (See earlier IPE article: Icelandic Investment Fund delayed)
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