2 May, 2022

Fund investment

Market analysis − A market analysis is performed whenever new funds are added to the portfolio. Initially, it could cover a very large number of funds that appear to be interesting and attractive. The approach is to, initially, keep the scope large so that assessment is based on an adequately large number of candidates. After that, the selection process is narrowed down. As the market analysis progresses, some funds will remain as candidates and others will be sorted out.

Selection − Funds are carefully selected, where the focus is on managers that have been able to deliver high returns and who prioritize sustainability. AP6 has designed and developed its own models for monitoring and analyzing how the fund management teams are working to create value in their portfolio companies and how they work with sustainability, both from a portfolio perspective and at the company level.

Evaluation − Detailed evaluation begins after the number of funds has been narrowed down. AP6 works with consistent processes for assessing the various investment alternatives. A fund’s strategy and market position is assessed by looking at such things as the sectors it is active in and the presence it has established as an investor in various regions. For the investment process and ownership, there is a review of the fund’s structural capital, value creation and how it monitors deviations. AP6 looks closely at the return, based on the resources available for developing the portfolio companies, how well aligned the investments are with the fund’s strategy, length of the holding period and its views on diversification. Opportunities for co-investment are seen as a very important aspect. With AP6’s investment model, sustainability is an integral part of the investment process, ownership phase and exit. Funds are assessed on their level of ambition and processes for sustainability, the extent to which each fund is aligned with international standards and frameworks and which resources have been dedicated to sustainability.