Sweden’s largest pension manager,
The fund, which has an actual allocation to private equity of just over 1 percent, will seek to commit between SEK 2.2 billion ($300 million) and SEK 2.5 billion to the asset class during the course of 2010. The goal is to gradually increase its allocation to a target of 5 percent.
AP1 plans to be cautious in making commitments, seeking to diversify its portfolio by vintage year, fund type and geography, including its first commitments in Asia. In addition, the pension fund manager will seek investments in secondary vehicles and distressed private equity among others.
AP1 has just over SEK 2.0 billion invested in private equity funds (1 percent of its funds under management), and around SEK 10.0 billion committed (5 percent). Its allocation is split about equally between European and U.S. private equity funds.
The fund’s alternative investments include real estate holdings, private equity (including venture capital), hedge funds and opportunistic investments. Total investments in alternatives as of June 2009 reached SEK 9.2 billion and accounted for 5.1 percent of net assets.
AP1’s private equity holdings consist of direct fund holdings in the Nordic market and three customized mandates in the international market managed by Swiss asset management group LGT Partners and U.S.-based Hamilton Lane and WP Global Partners.
The SEK 200.0 billion AP1 is one of five “buffer” funds in the Swedish pay-as-you-go pension system. The role of a buffer fund is to even out temporary fluctuations during periods when pension contributions are not sufficient to cover pension disbursements. From June 2004 to June 2009, the fund has generated investment earnings of SEK 27.0 billion.