AMF, Sweden’s third-largest pension provider, is investing SEK200m (€20m) in unlisted Swedish airline operator BRA (Braathens Regional Airlines), following the company’s formal financial restructuring after its craft were grounded for a year because of the pandemic.
The SEK800bn blue-collar pension fund said it was making the investment via a new share issue from the privately-owned airline, which was formed in 2016 from the merger of several Swedish regional operators and now aiming to become one of the world’s first airlines to have net zero carbon emissions.
The pension fund said the capital raising was aimed at financing BRA’s continued growth and its work to achieve carbon neutrality.
Anders Oscarsson, head of equities and ownership at AMF, said: “We see this as an exciting opportunity to invest in important Swedish infrastructure, and in a company with a very ambitious growth and sustainability agenda.”
He said the quest to become climate neutral at pace was an important piece of the puzzle for commercial success in an industry that was traditionally perceived to account for relatively high emissions.
“We believe that this has the potential to be a good deal for our savers, and look forward to following BRA’s continued development as active owners,” Oscarsson said.
BRA said in its statement on the capital raising that it had been operating 27 Swedish routes before the pandemic, with around two million passengers a year.
As a result of the crisis, the firm ceased scheduled air traffic for just over a year and underwent a formal restructuring under Swedish Chapter 11 bankruptcy rules, it said.
This led to much lower costs and more flexibility, the company said, adding that at the same time, “an ambitious vision” had been formed for relaunching air traffic with high growth targets in combination with the goal of achieving net-zero.
After the post-lockdown restart in May, the airline said it opened 16 domestic routes, which were operating using modern, more efficient aircraft.
AMF said BRA was working to increase the proportion of bio-aviation fuel used in its aircraft, adding that its ambitions surrounding electric aviation were also “very high,” and its goal was to be completely fossil-free by 2030.
Tomas Flodén, head of asset management at AMF, said the pension fund had good opportunities to invest in unlisted companies as a long-term investor.
“It is part of our portfolio that has grown relatively rapidly in recent years, and we appreciate the opportunity to further strengthen it with an interesting company with ambitious restructuring and growth plans,” he said.
Unlisted investments broadened AMF’s portfolio and risk profile, he said, while also generating reliable, long-term returns for its savers.
AMF has announced a series of investments in unlisted assets in the last two years. A recent example is its investment in Cake, a relatively new Swedish electric motorcycle manufacturer, in which AMF bought a 10% stake.