AP1, AP3 and AP4, Stockholm, agreed to form Polhem Infra, a jointly owned company focused on cost-effective investment in unlisted Swedish infrastructure, the Swedish pension funds said in a statement Thursday.
The three funds would allocate a total of 9 billion Swedish kronor ($1 billion) as initial commitments, an AP1 spokeswoman said. "Our ambition is to grow the company over time," she said.
Polhem Infra will focus on renewable power production, energy storage, energy distribution and digital infrastructure funds in private and public sectors.
Changes to Swedish investment guidelines that went into effect Jan. 1 increased allocation limits for the pension funds in illiquid assets, including infrastructure. The funds now can invest up to 40% of portfolios each in illiquid asset classes, up from 5%.
Polhem will gradually build an internal investment team but will also work with external investors and advisers, the spokeswoman said.
"Sweden has a great need of both public and private investment in infrastructure," CEOs Johan Magnusson of AP1, Kerstin Hessius of AP3 and Niklas Ekvall of AP4 said in a joint news release. "Parts of the existing infrastructure will require major investment to meet society's demands for quality and sustainability. With long-term ownership and a focused sustainability process, Polhem Infra has the capacity to be an attractive, priority player and business partner, which in the long term will benefit both the pension system and society in general."
AP1, AP3 and AP4 have $117 billion in combined assets.