Swedish pension heavyweights AMF and Alecta announced they are investing in a SEK4.6bn (€452m) financing round for SEK11.9bn Stockholm-based tech firm Epidemic Sound, with both pension providers citing robust growth prospects as reasons for the private equity move.
The SEK1trn provider Alecta and AMF – which manages SEK714.5bn – each said they were investing SEK300m in the unlisted music company, with Alecta naming other investors in the financing round as asset managers Blackstone, EQT and TIN Fonder.
Hans Sterte, head of asset management at Alecta, said: “Through the investment in Epidemic Sound, we are continuing to build up a portfolio of holdings in unlisted companies with great growth potential.”
Epidemic Music announced on 11 March that Blackstone and EQT had together invested SEK3.8bn in its capital.
Alecta, Sweden’s biggest pension provider, had made investments in unlisted firms Anticimex, Apotea and IVC Evidensia in recent years, Sterte said, and was “looking for more attractive investments in this area,” as he said these types of investments provided strong growth potential at good value.
Tomas Flodén, head of asset management at AMF, said: “The opportunity to invest in unlisted companies is an important competitive advantage for us as a financially-strong and long-term orientated pension company.”
Flodén added that AMF’s work to increase this part of its portfolio contributed to its competitive return, saying that it felt “particularly good” that the firm could continue to make this type of investment in fast-growing Swedish companies.
Alecta said Epidemic Sound’s business model – to buy music rights from artists and then offer them through a subscription service to companies and individuals – simplified the handling of music rights issues for content creators.
The pension company said its holdings in unlisted companies were included in its mid-cap portfolio – one of three portfolios into which it divided its various shareholdings. Since 2012, it said, the mid-cap portfolio had outperformed its comparison index by almost 170%, corresponding to over SEK19bn.
AMF, meanwhile, said it had previously invested in other Swedish tech companies, such as Spotify, Yubico and iZettle.