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Pension funds target roads PPP projects

zamara

Zamara Group Group Chief Executive Officer Sundeep Raichura speaks at Panafric Hotel in Nairobi on October 18, 2018, during the Kenya Pension Fund Investment Consortium. PHOTO | SALATON NJAU | NMG

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Summary

  • The law allows a fund to invest up to 10 percent of its portfolio in infrastructure and other asset classes.
  • Local pension funds, the World Bank and the US have been working over the past few years to introduce infrastructure as an investable asset class to Kenyan institutional investors.
  • Pension schemes are already a key source of cash for public projects in countries such as Brazil, Colombia, Mexico and Chile.

A consortium of 18 pension funds is seeking to invest up to Sh30 billion in public projects through the public-private partnership (PPP) model as members look to diversify their asset portfolio and raise returns for pension savers.

The Kenya Pension Fund Investment Consortium (KEPFIC), whose members control about Sh300 billion in assets under management, said it has identified 17 infrastructure projects in the water, energy, affordable housing and roads sectors that are viable for its intended investment.

The law allows a fund to invest up to 10 percent of its portfolio in infrastructure and other asset classes.

“We are doing a study of all the projects on the PPP pipeline to see how we can make investments in them. There are almost 17 projects that we are looking at this time,” said Zamara chief executive Sundeep Raichur who is also the chairman of KEPFIC.

Mr Raichura added that they have held talks with the World Bank and GuarantCo to guarantee projects before they start.

“There are a couple of projects that are at a very close stage of closing but with the infrastructure, it takes a while due to due diligence to be sure because this is people’s money… we have to get the guarantee from contractors as well as the government the that they will pay the amounts due to us on time,” he said.

Pension schemes in the consortium include those of Safaricom, Kenya Ports Authority, Kenya Revenue Authority, Kenya Power, KenGen, Moi Teaching Referral, Stanbic Bank Staff Pension Scheme and Zamara.

The Kenyan pensions sector had Sh1.478 trillion in assets under management as of June 2021, meaning that they can potentially unlock up to Sh148 billion for infrastructure funding.

Local pension funds, the World Bank and the US have been working over the past few years to introduce infrastructure as an investable asset class to Kenyan institutional investors.

The pension funds, especially want to leverage their long-term funding model for the projects through the government’s PPP model.

Pension schemes are already a key source of cash for public projects in countries such as Brazil, Colombia, Mexico and Chile.

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