18 November 2022, Johannesburg: In partnership with the U.S. Agency for International Development, MiDA Advisors, and the World Bank, the Batseta Council of Retirement Funds for South Africa (Batseta) commemorates the first anniversary of the Asset Owners Forum South Africa (AOFSA) today. Since its launch in November 2021, AOFSA has exceeded its fundraising target by nearly seven times.
AOFSA was created to mobilise South African retirement funds to invest in infrastructure, real assets and other alternatives. With 13 funds forming the core membership base, this Forum is enabling retirement funds to collaboratively increase their awareness and allocations to infrastructure by creating opportunities for co-investments and for local retirement funds to realise economies of scale by shared information and due diligence research.
“Since its establishment, AOFSA members have collectively committed R5.7 billion to infrastructure over the past 24 months. This has comfortably exceeded the R860 million target that we set out to achieve and is an indication of our members’ commitment to the objectives of the forum,” says Musa Mabesa, AOFSA Chair and Principal Executive Officer of the Government Employees Pension Fund (GEPF).
Fund due diligence
“The Forum does not make investment decisions,” explains Mabesa. “When considering the potential infrastructure projects, funds need to go through their own due diligence and governance process, and make their own investment decisions.”
There is no pressure on a fund to make any investment. There are, for example, no investment quotas for funds or stipulations regarding investment quanta. Each fund has its own investment mandate and needs to match its requirements accordingly, taking appropriate member-centric decisions to invest responsibly in infrastructure and other real assets.
Of specific significance is the spotlight that the Asset Owners Forum has shone on this asset class, isolating infrastructural assets and provoking new conversation around such investments.
“When a member is saving and/or participating in a retirement fund, essentially the benefit is for when they retire,” comments Kutlwano Mokhele, sitting Vice Chair of the Investment Committee. “With certain types of infrastructure investments, it is a way to unlock some value and enjoy certain benefits before retirement. We strive as a Forum, and as retirement funds, to employ professionals that share our values that will really look into the opportunities to make sure they are bankable and sound investments, as well as providing some social return.”
A collaborative process
In formulating its request for information (RFI) process, AOFSA consulted with its member funds as well as global partners MiDA Advisors and CrossBoundary. The Forum followed industry best practice for conducting manager searches that they believe will lead to inclusion and consideration of all eligible managers looking for investment consideration with the AOFSA members.
“It’s a collaborative process which sees the funds benefiting from the assistance of global partners and local partners as well as consultants and advisors,” notes Roselyn Spencer, Managing Director of MiDA Advisors.
The Forum is aimed at fostering engagement and outreach with retirement funds in other regions, from the U.S. to Europe and Africa, and to engage in exchanges and discussions of best practices in the industry, finding ways of improving collaboration and co-investment opportunities. It also plays an advocacy role with the government and other development finance institutions on policy-related matters such as the country’s investment strategy and Regulation 28 and in supporting initiatives such as the Just Energy Transition Partnership.
“We are also aiming to work even more closely with government. We view this as an ideal opportunity for public-private partnerships. We have seen outstanding examples of such successes in infrastructure developments, including water and sanitation concessions, hospitals, and the well-known Gautrain Rapid Rail Link,” Spencer adds. “PPPs offer a way to enhance service delivery and build foundations for the future, while at the same time facilitating job creation and economic empowerment. It can be an all-round win-win.”
USAID has provided resources to support AOFSA’s implementation partners MiDA Advisors and CrossBoundary in providing advisory support, capacity building, and technical assistance to develop the Forum’s framework to unlock and mobilise private capital in South Africa. With this technical support, a comprehensive pipeline of 64 projects for initial review was developed, then narrowed down for AOFSA’s consideration. Fund sponsors can reach out to the AOFSA by utilising the RFI process on their website.
Building for the future
“We are shaping the future of South Africa,” says Mabesa. “Our investment targets for this period since launch has been surpassed. The multiplier effects of infrastructure projects on socio-economic development and growth are well documented, which gives us considerable hope for the future.”
“We are well on our way to achieving our goal of increasing the amounts invested by pooling assets from large and small retirement funds into in long-term projects. All retirement funds within South Africa are welcome to join us on this journey.”
ENDS
For further information please contact:
Cambial Communications: Tel.: +27 (0)11 486 3561
Alex Honegger: 082 646 1770, alexh@cambial.co.za
Gillian Findlay: 082 330 1477, gfindlay@cambial.co.za
About AOFSA
The Asset Owners Forum South Africa (AOFSA) is a collaboration of local retirement funds to support a common goal of investing in South African infrastructure and real assets for the benefit of their members, while maximising the positive socioeconomic impact of those investments. The Asset Owners Forum South Africa officially launched in November 2021, with 12 of the largest pension funds in South Africa as founding members.
The Forum explores and catalogues public and private investment opportunities with a particular focus on real assets and other opportunities for consideration by the AOFSA members. It creates opportunities for local and international retirement funds to share information, research, and data resources to best inform decisions on infrastructure and other co-investment opportunities. For more information, visit: https://www.batseta.org.za/assetownersforum