LP Profile: Skandia Insurance Company

Click here for a full profile of Skandia Insurance Company on Unquote Data, including comprehensive fund investing preferences and history

"We have been investing in private equity for 29 years, and we will celebrate the 30th next year," says Jonas Nyquist, head of private equity and infrastructure at Skandia Insurance Company.

The 150-year-old Swedish mutual insurance firm has a long track record of investing in the asset class, yet it was in 2007-2008 that there was a marked uptick in its private equity activity following an allocation review. The insurer opted for a 10% target allocation to PE, when it had roughly 2% exposure at the time.

Skandia has successfully reached its private equity target over the last decade, and now has $3.5bn invested in buyouts and $1.5bn in venture capital. However, a small shift in the PE asset mix is likely, as Skandia currently has 7% and 3% allocated to buyouts and venture respectively, versus its 8% and 2% target.

"We are a bit below our target allocation for buyouts, and we need to grow the portfolio," says Nyquist. As a result, the firm plans to invest with new managers in an attempt to diversify its portfolio and meet its target.

"We typically make eight or nine commitments per year," says Nyquist. "For this year, from autumn 2018 to autumn 2019, we plan to back two to four funds with new managers, and between four and six funds with existing managers."

A typical commitment for a buyout fund is around $100m and between €15-25m for venture capital funds. The typical size of private equity funds backed is $1-6bn for buyout vehicles and $300m-1bn for VCs.

Relationships and co-investments
Skandia is an active co-investor, with such investments accounting for 5-10% of its buyouts. However, it has not made any venture co-investments.

"We have done co-investments for quite some time and they look good in terms of returns," Nyquist says. "We are planning to do more in the future. However, we need to be cautious when we make those investments – especially at this time – as some of them are pricey."

According to Unquote Data, the insurance company committed $12.5m to Siemens Audiology Solutions in 2014, a co-investment deal with EQT. It also co-invested with Cinven, for Visma in a secondary buyout.

We are planning to do more [co-investment] in the future. However, we need to be cautious when we make those investments as some of them are pricey" – Jonas Nyquist, Skandia Insurance Company

Skandia has around 170 GP relationships – 90 buyout and 80 venture capital – weighted 60% towards the US and the remainder in Europe, mainly in the UK, the Nordic countries, Germany and France. Nyquist explains that southern Europe is typically too small for the firm. Recent commitments include $8m to Francisco Partners V, $5.8m to Waterland Private Equity Fund VII, and $12m to Platinum Equity Capital Partners IV.

Skandia also has 15 LP relationships, where the majority are Swedish institutional investors that invest in the same funds as Skandia. It started its fund-of-funds business three years ago and there is a one-year commitment period.

Nyquist also adds that the insurer has historically invested in first-time funds, though it is something that they do infrequently as it requires a lot of work and the size of their internal team is relatively small.

Responsible investing
Skandia has an ESG-friendly policy and signed the UN principals for responsible investing. "We place a lot of attention on ESG, as we believe that it increases the returns and reduces the risks in investments," says Nyquist.

The insurance firm has the right to be excluded from certain investments, but it is primarily trying to influence the managers in the right direction with regard to responsible investing. "We think that's the way to go forward with it; trying to teach managers how we would like to see ESG being done," he explains.

Skandia has a separate ESG team within its asset management division and it has very close contact with portfolio managers in a bid to get the information needed for portfolio companies.

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