The Eskom Pension and Provident Fund plans to expand into venture capital to reduce its dependence on traditional investments.
According to Bloomberg, the fund has about R185 billion (~$10 billion) worth of assets under management, with roughly two-thirds allocated to South African stocks, inflation-linked debt, property and nominal bonds.
“We are about to invest in venture capital, which is a subset of private equity,” said Phathutshedzo Mabogo, deputy chief investment officer of the fund. “We’ll start with the offshore development markets like North America and Europe. We’ve committed $100 million.”
Recent amendments to South Africa’s pension legislation allows funds to invest as much as 45% of assets offshore. For the Eskom fund, the share is about 30%.
Mabogo further adds that private equity and venture capital represent “an area of growth that could deliver decent returns without introducing too much risk in the total portfolio.”
Currently, the fund’s exposure to private equity is about 5-6% of net asset value with no plans to increase offshore private equity investments to the legislated 45% in the short term.
With South Africa’s largest venture capital fund, the Naspers Foundry shutting down in February, one would have hoped that the Eskom fund would have considered investing in local startups before seeking offshore investments. Alas.