AMF, the second largest pension fund in Sweden, said it is ready to invest billions over the next year in local companies it views as long-term investments, and has earmarked up to SEK5bn (€548m) as a first step in supporting the Nordic country’s commerce through the COVID-19 crisis.
The SEK650bn pension fund said it would put money into the businesses in the form of new equity, beginning by working with companies in which it was currently a long-term owner, but said it was also open to buying new shares in other Swedish firms in conjunction with their existing shareholders and other investors.
Tomas Flodén, AMF’s chief investment officer, said: “As a major owner, we have both a responsibility and an interest in ensuring that our good and long-term viable companies remain, and are competitive even when the pandemic is over.”
AMF said that historically, the default providers in Sweden’s occupational pension system had succeeded in bridging periods of asset price declines on financial markets because they had been able to invest in different asset types – such as equities, bonds, property and infrastructure – based on their long-term ability to generate returns.
These key pension funds in the system also had the discretion to step in and out of these assets based on their long-term opportunity to generate returns, AMF said.
“For our pension savers, it is important that we ensure that the value that exists in these companies remains and grows over one, two and 20-year periods,” said Flodén.
Not all companies would remain viable when the pandemic was over, he said, adding that AMF had a responsibility to ensure that its customers’ pensions were invested in firms that had the potential for growth in the long term.
The pension fund, which is run on mutual principles and jointly owned by the Confederation of Swedish Enterprise (Svenskt Näringsliv) and the Swedish Trade Union Confederation (LO), said it had continued to invest despite recent market turbulence.
Recent deals included the increase of its equity stake in Swedish Hotel chain Scandic Hotels to 15%, AMF said, a SEK140m investment in Swedish wind power company Stena Renewable for the firm’s expansion, and a SEK280m investment in Swedish online supermarket MatHem.