AP3 increases allocation to PE

The SEK 353bn state-owned pension fund has also announced a total return of 3.3% from its entire portfolio for the first half of 2018, beating the LSP benchmark portfolio by 1.1%.

The Swedish pension fund generated 10% annual average returns over five years, and 7.3% for the 10-year period.

AP3 has recently committed $100m in an external unlisted insurance fund, in a bid to include insurance instruments in run-off, adding stability and balance to the portfolio.

The insurance sector has been a magnet for PE investors in the past two years, and 2018 in particular is shaping up to be a record year for inbound investments.

AP3 has also committed to MCP Opportunity Secondary Program IV and Northzone VIII. Other recent commitments include $50m to Newbury Equity Partners IV.

New regulations, progressing through the Swedish parliament, are expected to boost investments in private equity. The proposed guidelines include the increase of the cap on unlisted investments to 40% from the current 5%, ability to invest directly in private equity, infrastructure and private debt, and the lowering of the minimum requirement for fixed income from 30% to 20% of the portfolio.

The private equity portfolio was made up from commitments in several regions in 2017, including Europe (excluding Scandinavia) (SEK 1.5bn), Scandinavia (SEK 5.3bn), global (SEK 5.7bn) and North America (SEK 9.5bn), among others.

AP3 is also focused on embracing ESG criteria, and it has invested SEK 25bn in strategic sustainability investments over the last few years. "ESG is an important part of the due diligence underpinning the investment decision in all asset classes," an AP3 spokesperson told Unquote.

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