The decision shows that the country’s largest pension fund wants to remain unshaken even as it hunts for opportunities to invest the billions of pula in funds being returned home as part of changes in the law.
Under changes to the Retirement Funds Act, the BPOPF has to return no less than half of the P100 billion it holds in assets, back home by December 2027, but CEO Moemedi Malindah, said the pension fund would not entertain intermediaries.
“There is a crowding out effect and this is not from funds coming into the market,” he told the High-Level Business Forum held on Tuesday. “It is from international reputable players who want to pull money from BPOPF, Debswana Pension Fund and invest in local projects with local capital. “We do not need middlemen, we do not want people who will want a finder’s fee because this cuts out local investors.”
Pension funds previously resisted the legislative changes requiring them to invest 50% of their assets domestically. The pension funds argued that there were insufficient investable opportunities locally, particularly those of the quality required to maintain strong returns for pensioners.
Malindah noted that local investors were being muscled out by international brokers who wanted to use local funds for local projects. International intermediaries are often criticised for not putting their own “skin in the game,” and rather simply redirecting pension funds within markets.
In pension fund lingo, these facilitators are called placement agents and they act as intermediaries to connect asset managers and investors. They make a living from the commissions that come as finder’s fees for facilitating these investment decisions.
Early in 2014 five New York City Pension Funds passed a resolution to ban placement agents across all investment classes, a move that sparked international debate on whether pension funds need placement agents to fulfil their investment mandates.
In addition to its placement agent challenge, BPOPF also admitted that it continues to have challenges in deploying more of its assets towards local infrastructure.
Under the revised legislature, pension funds can invest as much as five percent of their total assets in infrastructure.
Malindah said there were implementation bottlenecks surrounding the arrangements with government, which still holds the primary mandate of rolling out infrastructure in the country.
“There are pockets of inefficiency with investing in infrastructure. We do studies, bankability studies and even structure the deals but implementation becomes a difficulty,” he said
In 2020, BPOPF had planned investments of P3 billion for local infrastructure over a period of two years, as a way of diversifying its holdings.
On Tuesday, Malindah bemoaned that years after first “touching” one of government's priority list of 17 potential Public Private Partnership projects, no movement had occurred on moving the initiative forward.
