Safaricom pension targets PE firms in catch-up game

Safaricom Staff Pension Fund is targeting investment opportunities in private equity (PE) firms as it seeks higher returns for its estimated 5,000 members.

The scheme generated a 14.1 per cent return on investment last year, slightly below the industry’s average of 18.5 per cent for schemes of similar size.

“The board strongly believes the PE class will offer the scheme additional diversification opportunities as well as unlock the potential returns that this asset class has to offer,” scheme chairman Joseph Ogutu said on Tuesday.

Mr Ogutu said the plan was to position the scheme as a major investor in the private equity and alternative investments asset classes.

Retirement Benefits Authority (RBA) investment rules of 2016 allowed pension fund managers and trustees to invest up to 10 per cent of the assets in PE and venture capital (VC) funds.

Pension schemes have, however, been slow to sink cash in PE and VC funds, which are largely foreign-owned and funded.

Preliminary statistics from the regulator, RBA, showed last week that only Sh1 billion of the industry’s nearly Sh1.1 trillion asset portfolio was held in PE funds last year.

READ: Safaricom pension scheme's Sh4.2bn project ready June

Safaricom’s pension scheme disclosed during an annual general meeting in Mavoko that assets rose 25.9 per cent to Sh10.7 billion last year, from Sh8.5 billion.

Investment in PE funds will help the scheme cut the share of its portfolio in real estate where it owns Crystal Rivers, a commercial and residential development in Mavoko whose value on completion is estimated at Sh4.3 billion.

Mr Ogutu said the Crystal Rivers Mall was 96 per cent complete and that firms such as Tecno and Samsung as well as eatery Java have booked space.

“We expect the mall to commence operations later this year as well as handing over the first batch of homes to our buyers,” he said.

RBA rules cap investment in real estate at 30 per cent.