AP3 and Kuwait’s Waifa team up for ‘new sustainable approach’ to private equity

The Third Swedish National Pension Fund, generally known as AP3, is launching a new investment platform with Kuwait's Wafra, to be called Covalent. 

The platform is focused on pursuing "a new sustainable approach to private equity co-investing, harnessing the capabilities, networks and experience of a small number of large, forward-thinking, global asset owners," AP3 explained in a statement.

"We believe that the prevailing approaches to private equity co-investment are ripe for positive transformation. By combining the resources and relationships of two of the world’s premier institutional investors, the founders of Covalent believe they can build a differentiated, fully aligned and agile source of capital," the companies stressed.

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Covalent is a follow-up on Capital Constellation, launched in 2018, whose investors include the Alaska Permanent Fund Corporation, New York State Common Retirement Fund, the Public Institution for Social Security in Kuwait and UK-based pension fund Railpen,

"Like Capital Constellation, Covalent is intended to better align all parts of the private markets value chain and allow like-minded asset owners to achieve together what they could not alone," explained Henrik Nordlander, head of private equity at AP3 said.

Nordlander said that “for AP3 this is a way to accomplish sustainable asset management," adding that "robust partnership with talented investment teams will allow us to continue to generate lasting benefits for both asset owners and asset managers.”

Covalent will be initially capitalised with $1.05 billion and focus on mid-market buyouts and growth equity investments, primarily in North America and Europe.

In addition, the platform will actively support and partner with skilled and private market asset managers to fund their investments and amplify their success, AP3 explained.

Moreover, Covalent will "seek to benefit from access to investment opportunities that include investments led directly by the Wafra investment team and the investments alongside the 27 asset managers with whom Wafra has formed strategic investment relationships."

AP3 is one of five funds that manage capital on behalf of the Swedish state pension system, with around $46.5 billion in assets under management.

Wafra, meanwhile, is a global alternative investment manager with over $30 billion of assets under management across assets such as including real assets, real estate, and strategic partnerships. Headquartered in New York, Wafra has offices in London, Kuwait and Bermuda.

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