AP4 eyes sustainability-focused PE funds

"We are looking at a number of fund/joint venture type structures [with a sustainability focus] with the option to do co-invests. Many of these structures focus on growth investments," Tobias Fransson, head of strategy and sustainability told Unquote following the release of AP4's half year results. 

The public pension fund, with private equity investments amounting to SEK 3bn (1% of assets under management (AUM)), has recorded a 3.8% return, according to its half-year results announced on Thursday. The fund has exceeded its medium and long-term returns target, and it currently has SEK 376.9bn in AUM.

AP4 has an appetite for co-investments in unlisted direct investments. Fransson said that it will focus on either co-investments with private equity funds, or with other long-term investors and asset operators once new guidelines are in place. The Swedish Ministry of Finance has proposed an increase of the unlisted investments threshold from the current 5% to 40%, as well as more flexibility to invest directly across private equity, infrastructure and private debt. The proposal is progressing through the parliament and it is expected to be effective in 2019.

"We do not have any specific allocation targets, but it is quite clear that it will be crucial for the development of our private equity portfolio to be able to also make direct co-investments. This would enable AP4 to make long-term, cost-effective investments in unlisted companies," said Fransson.

AP4 has recently appointed Jenny Askfelt Ruud as its new head of alternative investments. Ruud joins from Enwise, an investment and strategy consulting practice, and will start her new role in September.

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