New Namibian regulations that require institutional investors to invest a minimum percentage of their assets into unlisted vehicles are expected to boost private equity investment in the country, according to the Southern African Venture Capital and Private Equity Association (SAVCA).
The new rules, Regulations 28 and 29, prescribe that long-term insurance companies and pension funds must invest a minimum of 1.75 percent of their funds into unlisted domestic investments, with a maximum investment of 3.5 percent. Institutional investors’ exposure to non-listed investments has not been previously regulated.
At a SAVCA event earlier this month, chief executive Erika van der Merwe noted that the new regulations will provide Namibian insurance companies and pension funds with the incentive to take advantage of the “still-underutilized alternative asset class.”
As a result of the regulatory overhaul, the industry has seen a number of Special Purpose Vehicles (SPVs) set up as private equity funds with related fund management companies, and these managers are in the process of raising capital.
“As is the case in many African jurisdictions, supportive policies are necessary to encourage asset owners, including pension funds, to consider the valuable role that private equity can play in supporting economic development and growth, while providing the returns and diversification required in a diversified, long-term institutional portfolio,” said van der Merwe.
According to the Namibia Financial Institutions Supervisory Authority 2015 Annual Report, it is estimated that approximately N$3 billion ($214 million; €199 million) will be allocated to the asset class by December 31, 2015.
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