Zamara Group chief executive Sundeep Raichura. FILE PHOTO | NMG
Pension schemes are targeting large-scale investments through
pooling resources, aiming at higher risk-adjusted returns for members.
Through
the Kenya Pension Fund Investment Consortium, the schemes said this
would enable them to invest in alternative asset classes such as
affordable housing, private equity, energy and infrastructure projects
that would ordinarily be challenging if funds were to invest
individually.
“It may be difficult and daunting for a single pension fund, even a large fund to undertake such investments on their own.
“Investing
together can help to achieve economies of scale, lower costs, lower
exposures and risks and also importantly benefit from a higher
bargaining power,” said Zamara Group chief executive Sundeep Raichura.
The
consortium is currently made up of 10 pension funds that collectively
command an asset base of over Sh150 billion, both public and private
sector.
The consortium is wooing an additional 10 funds
as it seeks to formalise the association through a memorandum of
understanding amongst members.
The Retirement Benefits Authority (RBA) data show that pension schemes managed Sh1.08 trillion in 2017.
According
to the RBA data, the 19 fund managers and 11 approved issuers
controlled Sh904.91 billion of the retirement assets, while trustees of
various schemes directly managed Sh109.3 billion in property
investments.
The remaining Sh65.96 billion was
internally administered by the National Social Security Fund (NSSF),
which is the statutory pension fund.
Mr Raichura said
investing through a consortium would enable pension schemes to
collectively tap investment opportunities and generate higher returns
for members.
“Investing in these asset classes requires
detailed due diligence and evaluation as well as engaging legal,
financial and sector-specific expertise, which is made easier by pooling
of resources,” he said.
Industry players say the
alternative investment asset classes present new opportunities that can
enable pension funds to diversify risk and at the same time expose
members to potentially higher returns than traditional asset classes.
The schemes have missed out on lucrative emerging power and road infrastructure projects.
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