South African State Pension Fund to Invest More Offshore
South Africa’s Government Employees Pension Fund is planning to invest more of its 2 trillion rand ($144 billion) under management outside the country and in unlisted assets to reduce risk of overexposure to locally traded companies.
The strategy was outlined by GEPF Principal Executive Officer Abel Sithole to a commission of inquiry into allegations of wrongdoing and poor governance at the Public Investment Corp., the fund’s biggest manager. The GEPF has more than 93% of its assets invested in the South Africa and is a significant holder of South African government bonds and those of state-owned enterprises, he said.
“We now need to have that discussion with the finance minister,” Sithole said. The GEPF’s “significant home bias” isn’t wrong and has historically served the GEPF well, but it needs to manage risk, he said.
Moving more GEPF cash offshore could send shockwaves through South Africa’s listed companies, many of which count the PIC as its biggest shareholder. Meanwhile, increased investment in unlisted assets may help back new industries and support black entrepreneurs, he said, part of a wider initiative to redress economic imbalances caused by white-minority rule.
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