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Swedish pensions issues in infrastructure

18 February 2014

Social infrastructure investment is concerning Sweden's pension funds about damage to reputation. Anthony Lane reports

While the Danes gear up for more investment in public infrastructure, many Swedish pension funds are now concerned about potential reputational damage stemming from indirect investments in social infrastructure via increasingly unpopular and besieged private equity companies such as Nordic Capital.

Sweden's private equity industry is the largest in Europe in terms of assets relative to the size of GDP and is heavily involved in running public services. More than 10% of all Swedish pupils go to schools owned by private equity companies, with EQT owning one school corporation that teaches a total of 50,000 pupils, while 30% of public primary care is delivered by private companies.

Although private equity companies did get out of paying more than $600m in back taxes recently after Nordic Capital won a test case against the Swedish tax authorities who wanted to treat carried interest as income rather than a capital gain, the...