AP3, Wafra Introduce Private Equity Investment Platform

Covalent will initially be capitalized with $1.05 billion to focus on investments in North America and Europe.

Swedish pension fund AP3 and New York-based alternative investment manager Wafra Inc. have launched an investment platform called Covalent, which will initially be capitalized with $1.05 billion and focus on mid-market buyouts and growth equity investments, mainly in North America and Europe.

AP3 and Wafra describe Covalent as a collaborative asset owner platform that aims to develop and institutionalize a new approach to co-investing to earn risk-adjusted returns for its investors.

“For AP3, this is a way to accomplish cost-efficient, sustainable asset management as we strive to be a world-class investor,” Henrik Nordlander, AP3’s head of private equity, said in a release. “Covalent is further evidence that strategic partnerships among asset owners can support our commitment to generating superior net returns for our beneficiaries.”

Wafra likens Covalent to Capital Constellation, which it formed in 2018 in partnership with institutional investors, including the Alaska Permanent Fund, the Public Institution for Social Security of Kuwait and U.K. pension fund Railpen, to back private equity and other alternative mangers.

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“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,” the companies stated in the release.

According to AP3 and Wafra, Covalent will support and partner with private market asset managers to fund their investments, as well as collaborate on complementary deal flow, scaled resources and relevant data and intellectual capital by working with institutional investors worldwide.

The joint venture will seek out investment opportunities that include those led directly by the Wafra investment team, as well as investments with more than two dozen asset managers with whom Wafra has formed strategic investment relationships.

“By deploying flexible, patient capital and collaborating with highly skilled investment sponsors, we expect to continue to construct high quality portfolios of carefully selected private equity investments in targeted sectors alongside top tier investment firms,” Steve Moseley, Wafra’s managing director, said in the statement.

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