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Sweden's AP7 reveals e180m hedge/venture plans

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SWEDEN - The e2.3bn AP7 fund – the default fund for Sweden’s PPM system - has laid out its plans for the investment of around e180m in hedge fund and private equity assets in tandem with the selection of a consultant to advise on the process.

Daniel Barr, chief analyst at AP7, comments that the fund is operating a “selective” process, whereby investment management firms are being asked to send in expressions of interest from which the fund will subsequently send out a detailed RFP questionnaire.
“What we are asking for is expressed in quite general terms. We are looking for a hedge fund of funds with a balanced multi-strategy approach. For private equity we only stipulate that it should be global and include both venture and buy-out.”

Barr adds that the alternatives strategy is very much a core investment approach and says AP7 is not looking for undue risk from the exposure.
“The board has decided to make a preliminary change in the asset allocation giving four percent in hedge funds and four per cent in private equity.
“There are however some legal implementation issues that need to be solved so this is not a final decision made by the board, but we think that we are able to solve those problems.”

AP7 runs two funds, one for default choices in the PPM and another for those that select AP7 as their investment choice.
The former, Barr says, will get a four per cent allocation to each new asset class, while 8% in the selectors fund will be invested solely in private equity.

Barr points out that one of the issues to be discussed with the newly appointed consultant will be the number of private equity managers that the fund may take on: “In the private equity sector you will probably be committing money every year so that will mean more funds under way, but it is something we have to look at.”

Deadline for manager expressions of interest is November 26.

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