The country’s largest pension fund is also the biggest investor in local listed equities, with a P13 billion portfolio as at March 2023. Officials this week said this exposure was expected to increase as changes in pension fund legislation will require an increase in domestic allocations.
Under changes to the Retirement Funds Act, local pension funds will soon be required to invest a minimum of 50% domestically, from the current 30%, although the changes will be done in a phased manner over several years.
On Monday, when delivering an update on the BPOPF’s financial performance for the financial year ending March 2023, CEO, Moemedi Malindah, said the coming legislative changes were an opportunity to start investing in the property sector despite worries over returns offered by the market.
“It’s ripe to invest in downturns,” he said. “We like it when it’s tough because when everything is going well, prices can be difficult to keep up with. “We have been doing this for a long time and our property managers continue to invest.”
In 2020, the fund planned investments of P3 billion for local infrastructure over a period of two years, as a way of diversifying its holdings and a hunt for returns as targeted annual returns for the two years were revised.
However investing in infrastructure has proven to be an uphill task with officials saying that it’s a “tough environment to pursue”.
Malindah said there are also plans to increase allocations on the private equity incubator programme with a focus on local investments.
“As an investment strategy, this year we will increase investment towards our private equity incubator programme that will focus on local equities,” he said.
Thus far, the BPOPF has allocated P1 billion on domestic infrastructure investments through its property incubation programme for Botswana investments.
The BPOPF’s assets soared to P98 billion in the year to March, an uptick from P90 billion in the previous year. The increase in assets under management comes in the back drop of a strong performance, with the fund having enjoyed a bullish financial performance over the years.
“Since 2001 we have enjoyed steady growth since 2001 expect for years even when there were global economic downturns such as in 2009 during the financial crisis and 2020 in the advent of COVID-19,” he said.
The cash rich BPOPF now seeks to channel its strong balance sheet to improve the domestic economy, with Malinda saying the target would be the infrastructure space. The BPOPF’s assets are invested in various classes of domestic and offshore instruments, mainly equities, bonds, property and others.
The pension fund, through its asset managers, has traditionally held about 60% of these assets offshore and the balance locally.
