With Sweden’s two Gothenburg-based national pension funds deeply divided on how they should merge, the leader of private equity specialist fund AP6 said the pension system will lose out if the larger AP2 swallows her fund in the way it plans.
Katarina Staaf, AP6’s chief executive officer, told IPE: “It’s not in our hands at all. We think it’s our obligation to point to the risks in this transaction, this merger, for the sake of the pension system – but the decision is not ours, we cannot affect it.”
“We are hoping for the best, but we fear the worst,” she said.
In the interim report by official coordinator Eva-Lena Norgren on the merger of the SEK458bn (€41.6bn) AP2 and SEK71bn AP6 – part of a major reform of Sweden’s pensions buffer capital management – Norgren referred to the transfer as involving both AP6’s operations and assets.
But the report, published on Tuesday, said AP2’s assessment was that the transfer of AP6’s assets and liabilities “does not constitute a transfer of operations”.
The smaller fund believed the transfer of operations referred to both assets and personnel, Norgren said, as well as the application of its investment strategy.
However, the commission’s firm opinion was, she said, that the proposed changes to the pension system “have not entailed any change in terms of either the AP Funds’ mission or independence”.
“The starting point is therefore still that it is the Second AP Fund that develops and is responsible for its own investment strategy,” Norgren said in the document.
Staaf told IPE: “What is important for AP6 at this point is that the incredible portfolio we have created for many years, that delivers such good results, is taken care of in a good way.
“We are a specialist fund and have been doing this for almost 30 years, and we’ve developed a portfolio strategy in the last 13 years – and AP2 is a broad general fund, so we come to the table from completely different angles.”
“What is important for AP6 at this point is that the incredible portfolio we have created for many years, that delivers such good results, is taken care of in a good way”
Katarina Staaf, AP6’s CEO
She continued: “In order to deal with that, the government’s legislative proposal and its communication before that made clear that when these two funds are put together – because they know AP6 is a good, high performer – it’s really important to include the competence AP6 has.”
But this is not what is happening, Staaf noted.
“AP2 is saying we want to do it our own way, we don’t need those resources, we don’t need those processes, and we don’t need anything that AP6 does,” said the AP6 CEO.
She stated that AP6 has around 18 investment professionals dedicated to private equity, while AP2 had between two and three people dedicated to the asset class. Altogether, AP6 has 30 employees, while AP2 has 70.
“According to AP2’s plan, the large fund will only take one part of the AP6 portfolio into its active portfolio, leaving the rest in a transition portfolio, which is a run-off portfolio,” Staaf said.
For its part, AP2 argues that one purpose of the parliamentary decision to merge the funds is to reduce costs, which means jobs will be lost.
“That is obviously not an easy situation,” Åsa Norman, head of communications and sustainability at AP2, said to IPE.
Defending AP2’s plan for the merger, detailed in Norgren’s interim report, Norman said parliament had decided the fund’s mandate was unchanged, as a diversified buffer fund, and that asset allocation shall be made based on an ALM analysis of what was best for the pension system.
“This is the basis for determining a long-term allocation to private equity, which is appropriate to ensure a good pension for current and future generations,” she said.
Private equity offered high expected returns, but also higher risk, Norman said.
“AP2 will manage the transition portfolio with the same attention, professionalism and care as its long-term private equity portfolio”
Åsa Norman, head of communications and sustainability at AP2
“AP2’s 2025 ALM analysis, including global comparisons, concluded that a strategic allocation of 15% is appropriate for the fund, and high by international standards.
“A higher allocation would slightly improve expected returns but with significantly increased risk, reducing risk-adjusted performance,” she explained.
AP2’s plan is to divide the AP6 portfolio, managing part of it in its long-term private equity portfolio with the rest managed in a transition portfolio – with the government deciding how the funds will be allocated between the two, she added.
“AP2 will manage the transition portfolio with the same attention, professionalism and care as its long-term private equity portfolio,” Norman said, adding that the focus would be on creating value and generating liquidity over time, “without rushing divestments”.
While AP2 does have the same mandate as the three other large AP buffer funds, it was granted a higher upper allocation limit than the others for its unlisted assets of 50% compared to 40%.
Staaf said the government had said AP2’s higher illiquids limit was to make room for integrating AP6.
Read the digital edition of IPE’s latest magazine
