The Kenya Pension Fund Investment 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.
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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