Major realignment of portfolio underlies profit for the year
High liquidity after major divestments and the highest rate of investment in many years has affected the year’s return. In 2016, AP6 conducted a large number of transactions, which were both purchases and sales. It creates good conditions for a continued high return over the long term, even though the short-term effect is a lower return than last year. The annual return on capital employed over the last five years has been 9.8 percent.
The net profit for 2016 amounted to SEK 1,722 (2,867) million, which corresponds to a return of 6.5 (12.2) percent. The internal costs amounted to SEK 92 (106) million.
“Net profit for the year was impacted by the fact that two of the fund’s largest holding were divested, resulting in a temporarily high level of liquidity. It will be employed in accordance with a long-term plan. The rate of investment during the year was also high. There is, however, a short-term impact on return from the high liquidity, along with the fact that value creation in new unlisted investments occurs only after a certain period of ownership has passed. Unlisted investments are held over the long term, which means that returns must also be measured over longer periods of time,” says Karl Swartling, Managing Director at AP6.
Realignment of the portfolio concluded
Since 2011, efforts have been underway to realign the portfolio, which is based on a decision by the Board of Directors to follow a new investment direction. Holdings that did not conform to the new direction have gradually been divested. Now, with divestment of the two largest holdings, Volvofinans in 2015 and Norrporten in 2016, the realignment has essentially been completed.
Simultaneous to divesting many holdings, a new portfolio of investments is being set up through a high, but relatively stable rate of investment over the years. During 2016, AP6’s fund portfolio has been broadened substantially, in line with the plan that is based on the new investment direction. Many new fund commitments were concluded during the year as well, which has engaged AP6 in several new collaborations with leading funds. One consequence has been an even higher level of internationalization with the portfolio. Around ten new direct investments were also made during the year and they are expected to contribute positively to earnings over the coming years.
For more information:
Ulf Lindqvist, Head of Communications at AP6: +46 708 74 10 48
Sixth AP Fund (AP6)
Long-term investor in unlisted companies. AP6 applies its expertise to investments, both directly in companies and indirectly through funds. Direct investments are made primarily together with other financial investors, who share AP6's values and have a long-term investment horizon.
AP6 was established in 1996 as a closed fund, which means that there are no inflows or outflows of capital linked to the rest of the pension system. The fund manages its own liquidity. It is the only AP fund which, by law, may invest in unlisted assets. More information is available at www.apfond6.se
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