Pension schemes under their newly-formed umbrella body, the Kenya Pension Fund Investment Consortium is eyeing large scale investments through pooling resources of resources.
The consortium, which spearheaded by Zamara Group Chief Executive Officer Sundeep Raichura, says that teaming up of local pensions funds will enable them invest in alternative investment asset classes including affordable housing, private equity, energy and infrastructure projects which would ordinarily be challenging if pension 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,” Raichura added.
He said investing through a consortium approach will enable pension schemes to collectively invest in bigger and bolder investment opportunities than they would be able to on their own and can translate to higher risk adjusted 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 argued.
Alternative investment asset classes are proving popular as they present new opportunities that can enable pensions diversify risk for their members and at the same time expose members to potentially higher returns than traditional asset classes.
The consortium is currently made up of 10 pension funds that collectively command an asset base of over Ksh 150 billion, comprising both private and public sector pension funds. The consortium is additionally looking at hemming in an additional 10 funds as it seeks to formalise the association through the creation of a Memorandum of Understanding (MoU) amongst members.
Overall the pension sector in Kenya has grown significantly in the past few years and as at the end of 2017 the industry crossed the Ksh 1 trillion mark in assets under management. The bulk of the investments are still in the traditional asset classes mainly comprising of fixed income and equities.
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