The Government Employees’ Pension Fund (GEPF) reported a 13.7% growth in its portfolio during the 2011/12 financial year which saw its total value cross the R1trillion mark.
This was reflected in yesterday’s presentation of the GEPF results where the entity also announced bold plans to diversify its investments into the unlisted sector and play to play a meaningful role in social infrastructure investments.
As at March 2012 GEPF principal exposure was made of domestic equity through the JSE (50,7%), domestic nominal bonds (23,9%), domestic inflation-linked bonds (9,6%) and domestic property (4,7%). The GEPF represents 1,2 million government employees and 360 000 pensioners.
Presenting the GEPF results, Principal Officer John Oliphant announced that accumulated funds and reserves now stand at R1,039 trillion, about one third of South Africa’s gross domestic product.
He also announced major initiatives to diversify the GEPF investment base.
With 50% of its funds invested in the JSE, the GEPF Board has approved a model enabling the fund to invest in unlisted companies, said Oliphant.
In addition, said Oliphant, the GEPF will continue to play a significant role in social and economic transformation in South Africa. Up to 5% of its funds will be invested in economic and social infrastructure projects, the green economy, enterprise development and Broad-based Black Economic Empowerment (BBBEE).
“Our developmental investments seek to deliver both social and economic returns at the same time,” explained Oliphant. “Our recent investment in the Kiaat Private Hospital in Nelspruit, Mpumalanga, is a typical example of this. This investment addresses the challenges of affordable quality healthcare in Nelspruit while also protecting the financial interests of investors.”
“The GEPF is committed to ensuring that we pursue opportunities in the unlisted space given that sources of greater returns under current structural changes in the global economy are limited,” explained Oliphant.
He said a model to enable investment in unlisted entities has been developed, and GEPF governance structures have been strengthened to ensure mitigation of risk.
The model consists of six funds geared towards developmental investments. They cover Economic Infrastructure, Environmental Sustainability, Social Infrastructure, Priority Sectors and SMMEs, Private Equity, and Property.
The Economic Infrastructure Fund will focus on transactions in energy, commuter transport, broadband, water, liquid fuel and logistics networks. The Environmental Sustainability Fund covers investments in renewably energy, energy efficiency, energy storage, clean technology, green buildings, green firms, conservation and recycling.
The Social Infrastructure Fund will focus primarily on affordable housing, healthcare, education and skills development.
The Priority Sector and SMME Funds focus on manufacturing, agriculture, agro–processing, tourism, mining, retail, consumer-driven sectors, and broad-based black economic empowerment and other sectors that promote high job creation.
The Private Equity Fund covers medium to large cap buyouts and buy-ins, mergers and acquisitions, growth and expansionary capital, and venture capital. The Property Fund will seek to invest in retail, industrial and office property.
Oliphant said the GEPF is stepping up investments in Africa by allocating up to 5% of its portfolio to pursue opportunities outside of South Africa.
“Our continent is ripe for investment,” said Oliphant. “With over one billion people and a rapidly growing middle class, Africa, in tandem with the rest of the developing world, presents exciting investment opportunities for investors looking for good returns. With almost stagnant growth recorded in developed economies, Africa has strongly emerged as the next frontier for investment growth.”