AP6 - Sjätte AP-fonden (investor - Private Equity)

AP6, the Sixth National Pension Fund (Sixth AP Fund, AP6) is a Swedish Pension Fund that differs from the other National Pension (AP) funds in the Swedish buffer capital system in that it has a special mandate to invest in unlisted assets.

These assets are companies that are not listed on any stock market. AP6 is also a closed fund. In simplified terms this means no new money coming in, no money going out. AP6 manages the capital allocated to it at inception in 1996, plus the returns that have been generated.

Since launch, AP6 has been combining its role  as a direct investor with commitments to external funds.

Based on our vast experience, we see strong synergies between these two investment forms.

The combined approach has the following advantages:
• Better access to attractive investment opportunities
• Stronger position from which to place demands on our cooperation partners
• The opportunity to be more flexible in optimising the total portfolio of  holdings
• Lower average management costs, since direct investments do not involve any external fees

Advantages of co-investments for AP6
In our cooperation with the private equity funds we have invested in, we are actively looking for opportunities for so-called co-investments.

This means that we make parallel investments in companies that one of our funds has identified, analysed and acquired.

This type of cooperation gives us, as pension fund managers, access to investment opportunities that would otherwise realistically be beyond our reach. Furthermore, this access comes at a relatively low cost.

AP6’s organisation has a lot of experience of analysing and assessing investments in unlisted companies, and AP6 always takes its own, active decisions concerning such investments. Cooperation with private equity firms does, however, give us access to detailed analyses that we can use as a starting point.

Actual investments are then made without any external management costs or profit sharing. By systematically working with this type of investment, we are able to lower the average external management cost for the total amount of capital employed via cooperation with a specific fund.

However, in order to qualify for such investments, several conditions and requirements have to be met. A very important aspect is that investors must have the competence and experience required to make their own direct investments. This means an organisation like AP6 is more than qualified.