Diamonds in the Rough – How to Pick the Ideal Private Equity Fund for Pension Funds Investments!
A huge, game-changing, opportunity seems to have remained hidden in plain sight for many in the pension fund industry. Even recent regulatory changes shining the spotlight on this opportunity does not seem to have helped that much to open the eyes of many. Not only is this such a big loss to the industry, it also remains such an ignored potential trigger for kick-starting the turning around efforts towards the fortunes of our economy.
At about US$1.8 billion in total assets as of December 2021, the pension fund industry commands a significant share of the total asset stock of the capital markets. This is equivalent to about a quarter of the total market capitalisation of the Zimbabwe Stock Exchange.
The latest regulatory provision has now been expanded to a maximum allowable limit to unquoted shares of 15%, up from 10%. While this is still much lower compared to allowable limits in other jurisdictions, it is a respectable stride in the right direction. This now means that, of the US$1.8 billion of available capital, up to US$270 million could be allocated to private equity investments. Furthermore, on reading the regulatory provision closely, one could argue that, taking advantage of the “Other” allowable allocation at 5%, a further US$90 million could be allocated to private equity investments without breaching the regulatory provisions. Of course, this remains to be tested with the regulator, but there does not seem to be anything in the guideline that seems to suggest that the regulator would frown at it. That brings the total allowable allocation to private investments to just over a third of a billion dollars, US$360 million. For the full article, click link below