US$310 worth of projects granted prescribed assets instruments
Staff Writer
Harare, Projects valued at US$310 million and ZWL$8,5 billion were conferred prescribed asset status by the government to support their resource mobilisation efforts.
Under prescribed assets, the government requires such investors, such as pension funds, to hold a certain number of investments in government-specified assets in the form of government or state-owned entities’ bonds.
At law, pension funds and insurance firms are required to invest at least 20 percent of their investment portfolio in prescribed assets, and the sector has been struggling to meet specified thresholds.
The Insurance and Pensions Commission (Ipec), in its September 2023 quarterly report, said the prescribed asset status approved by the Minister of Finance, Economic Development, and Investment Promotion, Professor Mthuli Ncube, presents an opportunity for the industry to diversify its portfolio.
“Therefore, the industry is urged to invest in projects or financial instruments that suit their investment objectives to comply with the prescribed asset threshold,” the Commission said.
According to the IPEC report, the US$100 million Harvest Capital was the highest approved prescribed asset instrument, with the funds targeted for agriculture.
Harvest Capital is a private equity fund whose objectives, among others, are to create a US$100 million closed-private equity fund that primarily focuses on export-oriented agribusinesses and transform the productiveness of Zimbabwe’s agricultural value chain.
Stratus and Partners US$50 million was the second-highest approved instrument, also targeted for agriculture. Stratus is a licensed asset management company and last year listed Zimbabwe’s first ever agriculture-based commodity fund on the Financial Securities Exchange (FINSEC) with the intention of raising US$50 million.
Centra West instrument targeted for power generation valued at US$42,5 million as the third highest approved instrument, while West Property instrument for property development was valued at US$30 million.
AFC-Agro Bills valued at US$20 million and ZWL$8,5 billion were also granted the prescribed asset status.
The Revitus Real Estate Investment Trust (REVITUS REIT) received US$11,88 million in prescribed asset status for the funds targeted for refurbishment of distressed properties.
The REIT is owned by the National Railways Contributory Pension Fund and has five properties under the portfolio, with two in Bulawayo and three in Harare. REVITUS was listed on the Zimbabwe Stock Exchange (ZSE) on December 18, 2023.
Minister Ncube, in the 2024 national budget, made reference to the alignment of the conferment of prescribed assets to infrastructure projects that are aligned to the National Development Strategy 1 (NDS1) agenda of resource mobilization.
He said the government will come up with revised asset status-granting criteria to guide the industry in 2024.
Imara Asset Management investment in its Zimbabwe Strategy Notes for 2024 said Ipec has over the years commendably opened up the prescribed asset space to private players.
“The new criteria might see some quality private player-driven instruments not being accorded the prescribed asset status. As an industry, we had made a lot of progress in this space; it would be sad to see us regress again,” it said.
Zimbabwe’s pensions industry is known for mobilizing significant amounts of financial resources that are key to driving the economy.
The industry invests in various sectors such as infrastructure, property, stocks, and many others. The world over, they are the biggest institutional investors.
However, according to the IPEC report, the industry’s foreign currency-denominated assets increased by 42 percent to US$326 million as of September 30, 2023, from US$228 million in the same period in 2022.
The major asset classes were equities, prescribed assets, and money market investments, which constituted 47 percent, 20 percent, and 9 percent, respectively.
Total income earned by fund administrators in the quarter under review was $91,07 billion, compared to $8 billion in 2022.
Forex business income was worth US$1,62 million, with a local currency equivalent of $8,87 billion as of the reporting date, and constituted 10 percent of total income earned.
