South Africa’s Government Employees Pension Fund will invest as much as 50 billion rand ($6.5 billion) in the rest of the continent this year after reaping a return of more than 18 percent on the holdings in 2011.
“We have made returns in excess of 18 percent by investing in Africa and we’ve had a taste of its challenges and rewards,” Arthur Moloto, chairman of the Pretoria-based Government Employees Pension Fund, said in an interview today. “We have over 1 trillion rand in funds and have mandated that 5 percent be invested in Africa outside of South Africa.”
The fund already invests in Africa through the Pan-African Infrastructure Development Fund, he said. It has backed projects including international airports in Tunisia, under-sea optical fiber cabling in Nigeria as well as power stations in Kenya and Zambia. The Pan-African fund, which is managed by Johannesburg- based Harith Investment Managers, accounted for 0.1 percent, or 825 million rand, of the pension plan’s assets as of March 2011.
Pension fund managers are under pressure to boost returns to meet their obligations to an increasing ageing population. The GEPF, which has 1.2 million active members and 345,000 pensioners and beneficiaries, posted a total return of 12 percent in the 12 months through March 2011. While the International Monetary Fund cut its forecast for South African economic growth for 2012 to 2.5 percent, sub-Saharan Africa’s economy will probably expand 5.5 percent this year.
South Africa’s Public Investment Corp., which manages about 90 percent of the GEPF’s assets, has been asked to find targets across Africa for the GEPF’s 50 billion rand this year, Moloto said.
“It’s a three-pronged approach which includes finding medium-sized companies looking for funding, infrastructure and property development, and stock market investments,” he said.
The GEPF also plans to invest as much as a further 50 billion rand in emerging markets including Brazil, Russia, India and China, he added.
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