The managing director and chief executive officer, Sigma Pensions, Mr. Dave Uduanu, has noted that, Pension Fund Administrator(PFA) investments in infrastructure are currently yielding as high as 20 per cent.
Speaking at the Private Equity and Venture Capital Association of Nigeria (PEVCA) conference where stakeholders converged to discuss ‘The Road Ahead, Private Capital for National Development,’ Uduanu said, this is despite the fact that exposures of PFAs to infrastructure are small, just as he stressed that the ripple impact of investing in the critical infrastructure needed by Nigeria.
“If you look at the alternative broad asset class, what has done well is infrastructure funds. Infrastructure debt as a sub-asset class is about 1 percent of the industry and within that 10 percent construct and this fund has done well.
“One of the infrastructure debt funds although in the early days is tracking at 20 per cent of returns and it is naira based,” he said adding that asides it providing competitive returns, another gain for his firm is being able to reduce the infrastructure deficit in Nigeria.
“We are currently invested in two infrastructure funds and they are and they are doing very well. Infrastructure funds are doing better than private equity funds and we would begin to see more interest in that area. We would allocate more money to infrastructure because as we know the country needs a lot of infrastructures and the pension funds are getting competitive returns from these infrastructure funds,” he pointed out.
Commenting on PFAs investing through private equities (PE), he said the space is an emerging space with enormous prospects for PFAs and institutional investors.
To him, “The private equity market is a space where companies raise money outside the listed market and investors like pension funds invest through fund managers. The regulation doesn’t allow us to invest directly in unlisted securities, so private equity is the only way to access unlisted securities, growing companies, infrastructure, and real estate.
“It is an important market, however, it is very early and a lot of the investments that have been made haven’t reached their full lifecycle. A typical private equity fund takes about 10 years to make the investment and harvest the returns or return the money to investors. It is a good thing because Nigeria is at the forefront of private equity in Africa and the pension funds are driving domestic capital into this asset class.”
