26 November, 2018

Active ownership

Overview of ownership role

AP6 is an involved investor with clear requirements. A key part of AP6’s strategy is exercising active ownership. The purpose is to create long-term value growth in the investments we make. AP6’s responsibility as owner is also to ensure that value growth occurs in a responsible, sustainable way.

In its role as owner, AP6 strives to be perceived as:

  • Responsible and long term
    AP6 is a signatory of the UN Global Compact and the UN Principles for Responsible Investment (PRIs). As such, AP6 is committed to integrating sustainability issues into its investing activities. This is primarily done via a working method that states requirements, monitors and assesses in line with accepted international conventions.
  • Businesslike and professional
    To succeed with the overall goal of generating a long-term high return and adequate risk diversification, it is necessary to act in a businesslike and professional way at all times, and have expertise in many areas. AP6 employees have a wide variety of specialist expertise and extensive experience in assessing and investing in unlisted companies and funds.
  • Stating requirements and getting involved
    An owner with requirements must formulate, gain support for and monitor that the stated goals for an organization are being pursued and achieved. As owner, the goal for the investment must be clearly formulated. It’s a prerequisite for exercising the role as owner. AP6’s expectations are included in goal formulation, along with how they shall be acted upon in each holding.

 

The ownership role for various types of investments

AP6 has developed its own working methods and processes for being an active owner with requirements for both indirect and direct investments in unlisted companies. The various forms of investment require different types of expertise. The way of exercising an active role as owner also differs, depending on the type of investment.

Fund Investments:

A commitment to a PE fund is a promise of long-term collaboration with an external manager. The funds invest the committed capital in unlisted companies over time. A typical fund has a lifespan of around ten years and it consists of between 15-20 holdings. The fund is closed once all of the companies have been divested and the capital (including the return) has been returned. With Fund Investments, AP6 only has an indirect relationship with individual portfolio holdings, but it exercises an active ownership role with the fund itself. AP6 does this by participating on the fund’s advisory board, which supplements its ongoing dialog with the fund’s managers. AP6 also has well-developed routines for stating requirements, assessing and monitoring the fund’s activities.

Co-investments with a fund:

Co-investments are when AP6, via its investment in a fund, is invited to also invest directly in a specific portfolio company. The ownership role and corporate governance associated with this type of investment is similar to a fund commitment. In other words, there is indirect involvement via dialog and stating requirements on the managers who are responsible for the fund and its holdings.

Joint investments:

AP6 collaborates with various types of investors specialized in unlisted investments. For joint investments, AP6 exercises a direct ownership role with the company it has invested in. Together with the co-investor, AP6 plays an active role in assessing the investment and exercising ownership during the duration of the holding. For joint investments, AP6 typically has a holding that entitles it to representation on the company’s board of directors, together with the majority investor and external representatives.

Active ownership

AP6 is always one of several owners or investors in its holdings. Accordingly, clear and continuous communication with the other owners of the holdings is an absolute necessity. AP6 strives for transparency between owners and holdings, along with a structured working method that facilitates active ownership with holdings. The AP6 Ownership Policy, which is available under Reports and Documents, contains a detailed description of the working method for active ownership.