Despite defending themselves, Sweden’s big four national pensions buffer funds face yet more political scrutiny about whether they were right to invest in the now-bankrupt battery company Northvolt – a 2021 decision that led to a SEK5.8bn (€532m) loss.
The chief executive officers of AP1, AP2, AP3 and AP4 – which collectively manage SEK2trn of buffer capital in the state pension system – were called to Sweden’s parliament (Riksdag) to answer questions on Tuesday from the Finance Committee.
The funds have come in for criticism in the Swedish media recently, with reporting by national television broadcaster SVT focusing on the four funds having created a complicated structure to buy shares in Northvolt, when they were prohibited by law from buying unlisted shares directly.
The four CEOs defended their decision to invest in Northvolt and to use the newly-created, jointly-owned company 4 to 1 Investments as a vehicle to do so, in SVT interviews before the committee hearing on Tuesday.
However, the chair of the parliamentary panel, Edward Riedl of Swedish prime minister Ulf Kristersson’s Moderate Party, told SVT afterwards that he intended to take things further.
Riedl said: “I think, when it comes to the structure itself, the lawyers’ best assessment is that they have stayed within the law.”
But SVT also reported that he remained sceptical of the investment structure used by the AP funds, which he had previously described as “creative”.
“It still feels a bit as if they have tried to use this structure to get around the legislation,” Riedl is reported as saying.
“Something has happened here that looks very strange. We need to follow up on that. Ultimately, this is about the pension money being handled in a good way,” he said, according to SVT.
“From time to time there will be investments in such portfolios that do not meet expectations and, of course, we regret that Northvolt did not succeed”
Åsa Mossberg, head of communications and sustainability at AP2
Asked for comment on Tuesday’s hearing, Åsa Mossberg, head of communications and sustainability at AP2, told IPE: “We appreciate that we had the opportunity to meet with the Finance Committee and to provide them with information and answer questions regarding the investment.”
She said the investment in Northvolt had been carried out in accordance with the AP Fund Act, which she said had been decided on by a broad parliamentary majority well before the AP funds initiated the investment, and which specifically allowed for the structure that was used.
“The AP funds have also followed their respective investment processes for investments in unlisted assets,” said Mossberg.
Over time, she said, the funds’ diverse portfolios, with both listed and unlisted assets, had contributed to the strength of the pension system.
“From time to time there will be investments in such portfolios that do not meet expectations and, of course, we regret that Northvolt did not succeed,” the Gothenburg-based buffer fund’s communications chief said.
“For perspective, during the time frame of the Northvolt investment from 2021-24, AP 1-4 generated SEK450bn in returns to the pension system,” she added.
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