Safaricom Staff Pension Fund is targeting private equity (PE) investments over the next two years as it moves to diversify its asset portfolio, according to Chairman Joseph Ogutu.

“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. Indeed, our aim is to position the scheme as a major investor in the private equity and alternative investments asset classes,” said Ogutu during the 2018 Annual General Meeting.

The pension scheme reported that despite a challenging economic environment, net assets increased by 26% from Sh8.5bn to Sh10.7bn, generating a net return of 14.1%.

Ogutu said that if the scheme’s property portfolio were included, the overall return from its assets would be 22.3% – well above the industry average. 

He added the overall pension industry weighted average performance for year 2017 was 18.5% for schemes of similar size to that of Safaricom Staff Pension Scheme.

Retirement Benefits Authority (RBA) investment rules of 2016 allowed pension fund managers and trustees to invest up to 10% of the assets in private equity and venture capital funds.

Pension schemes have, however, been slow to invest in PE and VC funds.

According to RBA statistics, only Sh1 bn of the industry’s nearly Sh1.1trn asset portfolio was held in PE funds last year.

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.
Ogutu said the Crystal Rivers Mall was 96% complete and that some of the tenants have already commenced fitting out their respective stores.

“We have seen an influx of technology brands including Tecno and Samsung as well as hospitality brands including Java securing space as they position themselves for the burgeoning Mavoko sub county population,” said Ogutu.

“We expect the mall to commence operations later this year as well as handing over the first batch of homes to our buyers. Despite the challenges commonly associated with property development, I am satisfied with the progress made so far and look forward to the completion of this project and the eventual roaring to life of Crystal Rivers,” he added.