Heimstaden - comment

Late October (27th) the Swedish financial watchdog filed a report of suggested corruption relating to Alecta’s investment in Heimstaden Bostad AB. This was first raised in September when Sweden’s FSA commenced an investigation into Alecta’s investment process when they became Bostad’s largest shareholder. 

Publication of this development has led to the Heimstaden Bostad’s hybrids to trade off c.5pts to c.40%, as the probability of equity injection has materially reduced. Whether the corruption involves Heimstaden Bostad specifically remains unclear. It is worth remembering that Heimstaden Bostad raised additional equity in March of this year, with Greater Manchester Pension Fund providing c.€300m in fresh equity which was used to fund bond buybacks and a distribution to Heimstaden AB. In this light, we also reconsider Ivor Tollefsen’s recent interview, in which he was openly looking for new investors.