The Church of Sweden’s pension fund has defended a huge real estate investment it made in 2022 which sparked censure from the country’s financial watchdog, saying it had been under “extreme time pressure” and had only wanted to protect scheme members’ interests.
Carl Cederberg, chief executive officer of Kyrkans Pension, told IPE today: “The church’s pension is evaluating the Financial Supervisory Authority’s remark in connection with a further investment in Fastighets AB Stenvalvet.”
The Swedish FSA (Finansinspektionen, FI) announced last week it was fining Kyrkans Pension SEK5m (€447,000) for failing to have any limit in its internal rules on how much investment risk it can take.
In its remarks, FI said the case had started in 2022 with an investigation into whether the SEK25.8bn pension fund had followed external and internal rules in connection with the expansion of its investment in real estate company Fastighets AB Stenvalvet.
Cederberg said: “The purchase of Kåpan’s shares in Stenvalvet took place at the beginning of 2022 under extreme time pressure.
“The Church’s pension fund was solely focused on protecting its capital and thus the members’ interests,” he said.
Kyrkans Pension increased its stake in Stenvalvet at the beginning of 2022 to around 69% from about 37% in the face of a plan by Swedish real estate company SBB to become a major owner of the firm.
SBB (Samhällsbyggnadsbolaget i Norden) had announced its intention in November 2021 to buy 23% of Stenvalvet’s shares from the pension fund Kåpan.
But instead, existing shareholders Kyrkans Pension and the Swedish Foundation for Strategic Research (SSF) exercised their pre-emptive rights and bought Kåpan’s entire holding in Stenvalvet.
“Had the [SBB] attempt been successful, the consequence would have been future large losses in value as SBB became the owner and gained insight into the competitor Stenvalvet’s operations,” Cederberg told IPE.
He said Kyrkans Pension had “one of the strongest balance sheets of the Swedish occupational pension companies, with a solvency ratio of 258%, which gives our members a great deal of security”.
Between the end of 2021 and the end of 2022, Kyrkans Pension’s allocation to real estate almost doubled to 29% from 16%, but has since fallen back to 25.9% at the end of 2023, after a year with a -4.5% return for the asset class, according to the pension fund’s annual reports.
Read the digital edition of IPE’s latest magazine
No comments yet