Sweden Could Crack Down on Pension Investing in Activist Funds

September 14, 2006 (PLANSPONSOR.com) - If ruling Social Democrats are returned to office in Swedish elections this weekend, pension officials in that country will be prohibited from supporting activist investment funds targeting leading Swedish companies.

The Financial Times newspaper reported that Prime Minister Göran Persson said earlier this week that after Sunday’s balloting “we will discuss how to give pension funds new rules so that they have to stay away from that kind of fund.”

His comments follow a move by Cevien Capital, a Swedish activist investment fund, to acquire a 5% stake in Volvo and demand it redistribute billions of dollars in excess cash to shareholders. “Pension funds should not take part in actions like the one Cevien plans against Volvo,” Persson told the newspaper. “They should have a more long-term perspective.”

According to the news report, Persson has recently deployed stronger language against “risk capitalists” as a means of bolstering his party’s chances of success on Sunday.“I dislike that type of capitalism,” he said, according to the Financial Times. “It’s dangerous for Sweden . . . and will bring a shorter perspective on ownership towards companies and industries.”

Speaking to reporters on his campaign bus, Persson said there was “a clash between those who are the engineers in a company who actually want to build something long term and those who are just looking for a short-term reward.”

The newspaper said that Persson’s comments echoed recent criticism of activist investors by Dutch and German officials. For example, in the 2005 German election campaign Franz Müntefering, a leading Social Democrat, accused private equity funds of behaving like “locusts” in devouring local companies.

Cevien is run by Christer Gardell, who is Swedish, but his fund has international investors, including Carl Icahn, a US billionaire.