International gatekeepers and fund of funds managers Hamilton Lane Advisors and HarbourVest Partners have been appointed to run an $84m private equity investment mandate for the $2bn Seventh Swedish National Pension Fund (AP7).
Hamilton Lane, which is understood to be in charge of the majority of the mandate, is going to manage a separate account for AP7, building a diversified portfolio of buyout, venture, special situations and secondaries funds. In addition, the fund has committed to two of HarbourVest’s funds of funds, the European-focused International Private Equity Partners IV and HarbourVest Partners VII, which mainly invests in US partnerships.
AP7 is the default fund for premium pension assets in the Swedish social security system. As a mutual fund, it is required to regularly determine net asset value, and so has asked Hamilton Lane and HarbourVest to provide monthly NAV estimates of the underlying private equity investments.
In order to place the mandate, AP7 carried out a public procurement procedure, which prompted expressions of interest from around 80 international fund of funds group. When AP7 specified investment criteria including price, transferability of the underlying assets, compliance of general partnerships with its Socially Responsible Investment Policy and, crucially, an investment track record of at least five years, 60 funds of funds had to withdraw from the bidding.
Of the remaining managers AP7, which was advised by Boston-based investment consultants New England Pension Investments, held interviews with six groups before making the final selection.
Investing AP7’s capital in private equity funds is expected to take between four and six years. Alongside this four per cent of total assets allocation to private equity, the fund is aiming for another four per cent to be invested in hedge funds.