Saturday, January 22

Retirement funds establish a forum to boost investment in infrastructure

Twelve South African retirement funds with an estimated R3 trillion in assets under management (AUM) have established a forum to collaborate regarding investment in infrastructure in South Africa.

The new entity is known as Asset Owners Forum South Africa (Aofsa).

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Read: Treasury listens to industry on Regulation 28

The United States Agency for International Development (USAID) and the Advisors for Mobilizing Institutional Investors to Develop Africa’s Infrastructure (Mida) will provide technical and advisory support to the new forum. The World Bank offers training and advice on infrastructure investments.

The Batseta Retirement Council for South Africa convened the launch of the forum and provided secretariat services.

The 12 funds that are part of Aofsa are:

  • The Government Employees Pension Fund with AUM of R2.1 billion at the end of March 2021;
  • Eskom Pension and Provident Fund with AUM of R184 billion;
  • KwaZulu-Natal Electric Industry Pension Fund;
  • Provident Fund for Mining Workers;
  • Retirement Funds for the Motor Industry;
  • National Fund for Municipal Workers;
  • SABC Pension Fund;
  • Transnet Retirement Fund;
  • Telkom Retirement Fund;
  • KwaZulu-Natal Joint Municipal Provident / Pension Funds;
  • The Transportation Sector Retirement Fund; and
  • South African Local Authorities Pension Fund.

The chair of the forum is Ndabezinhle Mkhize, who is also CIO of Eskom Pension and Provident Fund. The vice president is Jolly Mokorosi. She is a Chartered Chief Executive Officer, Independent Trustee, and Director of Batseta.

Mkhize said the forum aims to support infrastructure investments by sharing knowledge, resources and due diligence costs.

Huge growth

Over the past 20 years, there has been tremendous growth in the alternative investment asset class, according to Mkhize. Allocation to alternative assets has increased from 7% in 2000 to 26% in 2020.

The formation of the new entity occurs when the National Treasury revises Regulation 28 of the Pension Fund Law to facilitate that retirement funds invest in infrastructure.

“This is the only forum whose raison d’être is to enable asset owners to invest meaningfully and responsibly in infrastructure and real asset strategies,” Aofsa said in a statement.

During the launch, Kgosientsho Ramokgopa, head of investment and infrastructure in the Office of the President, said that infrastructure would be the steering wheel to help achieve local GDP growth.

Olano Makhubela, divisional executive for retirement fund supervision at the Financial Sector Conduct Authority, said the new forum is well positioned to make a difference in South Africa. He suggested that the forum should be known as the South African Active Homeowners Forum.

“I’m glad you chose the Asset Owners Forum name because owning assets comes with specific responsibilities. However, I am a bit disappointed that you omitted the word ‘active’, ”Makhubela said.

“They must be active as asset owners. If it is not active, it will lose its relevance quickly. You need to ask important questions about gender pay inequality, diversity, discrimination, the environment, and company practice. Sometimes it is necessary, however difficult it may be, to vote with your feet ”.

During the launch, US Consul General in Johannesburg Vincent Spera said the US government is committed to working with the forum to lay the groundwork to enable local pension funds to invest in alternative asset classes such as infrastructure. and private capital.

Justin Brown is a reporter for Citywire, providing insights and information for professional investors around the world.

This article first appeared on Citywire South Africa hereand republished with permission.

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