SWEDEN - Hemsö Fastighets, a property joint venture half-owned by Sweden's third pension buffer fund (AP3), has raised SEK750m (€82.4m) through an oversubscribed bond issue.
The three-year bonds - which the joint venture will now seek to list on the Swedish stock exchange - carried a coupon of STIBOR 3m plus 2.25%.
Hemsö Fastighets, which is also 50% owned by listed company Kungsleden, issued the unsecured bond to take advantage of relatively cheap finance to strengthen its balance sheet alongside bank funding.
The Stockholm-based entity invests in ‘community property', including retirement homes and school buildings, usually in partnership with municipal governments.
Johan Risberg, deputy CEO at Kungsleden, said: "In Sweden, it's difficult to find cheap money even if it's secured bank finance.
"You have to find other forms of finance to keep up the balance sheet."
The capital raised has not been earmarked for a specific development project or acquisition.
Risberg said he "wouldn't be surprised" if Hemsö decided to issue more debt over time in the domestic bond market, which has developed significantly over the past year. But he emphasised the need to get the existing bonds listed on the Stockholm stock exchange first.
"If you're constantly in the bond market, issuing bonds every six, 12 or 18 months, that's one thing," he said.
"But if you're issuing a bond every fifth year, you have to teach the market about the company. If you don't list, you'll lose a lot of investors - and the price will be something else."
Kungsleden counts among its shareholders the second and fourth Swedish pension buffer funds (AP2 and AP4), Dutch pension fund manager PGGM and the Norwegian Pension Fund Global.
It owned Hemsö as a subsidiary before 2009, when it brought in AP3 as a long-term investor seeking low-risk, uncorrelated investments and long leases.