Swedish pension funds AP1, AP3 and Folksam have joined forces with Borealis Infrastructure to buy electricity distribution networks in Sweden from energy company Fortum for SEK60.6bn (€6.6bn).
The three funds formed a consortium to buy Fortum Distribution, as the energy firm sealed the deal as the conclusion of its divestment of all the electricity distribution business it owned.
Kerstin Hessius, chief executive at state buffer fund AP3, said: “This infrastructure investment is an excellent fit for the AP3 portfolio.”
The fund had been working on the deal for more than 18 months, she said.
“As a large pension fund with a long-term investment horizon, AP3 and our consortium partners provide a fitting owner for the electricity grid,” Hessius said.
Last month, AP1 heralded a shift towards this type of investment, saying its organisation was getting set for investments in different types of infrastructure.
Johan Magnusson, chief executive at AP1, said: “Infrastructure is an important component in our long-term portfolio.”
He said the investment was a high-quality one that would benefit the pension fund’s portfolio and therefore the Swedish pension system for a long time to come.
Fortum Distribution is the second-largest electricity distributor in Sweden, providing 906,000 customers with electricity and having a market share of around 17%, the consortium parties said.
The funds said they would be long-term and stable owners and continue developing the grid to ensure good, reliable electricity distribution for customers.
The consortium consists of Borealis Infrastructure with 50% ownership, AP3 with 20%, Folksam and subsidiaries with 17.5% and AP1 with 12.5%.
Borealis has put together and managed infrastructure investments on behalf of the CAD72bn (€53.2bn) Ontario Municipal Employees Retirement System.
The deal is expected to be completed in the second quarter of this year, subject to regulatory approval.