Pension funds target road PPP projects

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Pension funds target road PPP projects


Zamara Group Chairman and CEO Sundeep Raichura speaks at the 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% of its portfolio in infrastructure and other asset classes.
  • Local pension funds, the World Bank and the United States have worked in recent years to introduce infrastructure as an investable asset class for Kenyan institutional investors.
  • Pension plans are already a vital source of liquidity for public projects in countries like Brazil, Colombia, Mexico and Chile.

A consortium of 18 pension funds seeks to invest up to 30 billion shillings in public projects through the public-private partnership (PPP) model as members seek to diversify their portfolio of assets and increase returns on savers.

The Kenya Pension Fund Investment Consortium (KEPFIC), whose members control around 300 billion shillings in assets under management, said it had identified 17 infrastructure projects in the water, energy, affordable housing sectors. and roads that are viable for its intended investment.

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

“We are conducting a review of all projects in the PPP pipeline to see how we can invest in them. We are currently reviewing around 17 projects, ”said Sundeep Raichur, Managing Director of Zamara, who is also President of KEPFIC.

Mr Raichura added that they have had talks with the World Bank and GuarantCo to secure the projects before they get started.

“There are a few projects that are about to close, but with the infrastructure it takes a while because of the due diligence to be sure because it’s the people’s money… we have to get the collateral from the entrepreneurs as well as the government that they will pay the amounts owed to us on time, ”he said.

The consortium’s pension plans 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 pension sector had assets under management of 1,478 billion shillings as of June 2021, which means it has the potential to release up to 148 billion shillings for infrastructure financing.

Local pension funds, the World Bank and the United States have worked in recent years to introduce infrastructure as an investable asset class for Kenyan institutional investors.

Pension funds, in particular, want to leverage their long-term funding model for projects through the government’s PPP model.

Pension plans are already a vital source of liquidity for public projects in countries like Brazil, Colombia, Mexico and Chile.

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