Companies and funds have this year made pitches for investments worth Sh770 billion to local pension funds, eyeing a slice of the capital that the schemes are allowed to invest in alternative asset classes.
The Kenya Pension Funds Investment Consortium (Kepfic) says it received 57 infrastructure and alternative investment proposals from fund managers and project sponsors following a call for the same in December 2022, from which it shortlisted 19 for consideration from members.
The consortium, formed by pension funds looking to invest in infrastructure and alternative asset classes, called for the proposals at a time when returns from traditional asset classes have witnessed diminishing returns in a tough economy.
“In terms of the investment instrument, more than half were looking for equity, 13 were looking for debt and the balance were looking for both equity and/or debt. As Kepfic, we don’t have a preference for any particular instrument over the other,” said Kepfic head of secretariat Ngatia Kirungie on Thursday.
“Debt is fairly easy to understand, as it’s all about cash close, but equity requires a little bit more nuance and expertise, and we are happy that we can piggyback on the skillset of the private equity and debt players in the market as well.”
The Kepfic call for proposals saw the infrastructure sector yield the highest number of requests at Sh104.9 billion across four projects, followed by healthcare, which yielded two proposals seeking Sh75 billion.
Four MSME (small business) focused funds pitched four proposals valued at Sh71 billion, followed by agriculture with one fund seeking Sh37 billion, and the energy sector with three calls valued at Sh33.8 billion.
The property sector had the most number of firms seeking investment at five, valued cumulatively at Sh22.5 billion.
The local pension industry currently holds Sh1.58 trillion in assets under management, but the bulk (95 percent) is invested in traditional asset classes—government securities at 46 percent, guaranteed funds (19 percent), property (16 percent) and 14 percent in quoted equities.
In a bid to encourage diversification from these classes, the Retirement Benefits Authority (RBA) has in the last few years allowed schemes to put funds into new asset classes such as private equity, Real Estate Investment Trusts (Reits), venture capital, hedge funds and private debt.
The biggest of these alternative classes is private equity investment at Sh3.56 billion, representing just 0.23 percent of total assets by December 2022, the latest data from the RBA show.
