The East African Venture Capital Association (EAVCA) in partnership with Financial Sector Deepening Africa (FSD Africa) and International Finance Corporation (IFC) have launched an investment guide to enable regional pension schemes to invest in Private Equity (PE) Funds.

Named Private Equity Investment Guide, the objective of the tool is to deepen the understanding of Private Equity structures among Pension Fund Managers and their Trustees to unlock more investment into the asset class.

The guide mainly covers three key areas – understanding the asset class and where it sits alongside other asset classes, why and how to invest in PE’s and an overview of the benefits and risks of investing in Private Equity.

The development of the guide was informed by a market study report that sought to investigate the low uptake of investment by Pension Schemes. In Kenya, for instance, PE allocations by Pension Schemes account for only 0.08% of the total industry assets under management. From a regulatory perspective, there are provisions allowing Pensions to invest in PE funds across East Africa (Kenya, Uganda Rwanda, Tanzania, and Ethiopia).

According to Kenya’s pension regulator the Retirements Benefits Authority RBA, though the country has had regulations that provide for diversification of Pension Funds away from traditional instruments most pension schemes are still predominantly bond and stock investors.

“The Guide will be important in bridging the existing knowledge gap by trustees on investing in Private Equity whose uptake has been very low in the pension scheme investment portfolio. As a regulator we are positive and open to new ideas in broadening pension growth and continue to review the legal framework to keep pace with emerging trends and expand the investment horizon for Pension funds,” said RBA Chief Executive Officer Nzomo Mutuku.

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