BY MICHAEL EBOH
The National Pension Commission, PenCom, said that it will adopt a flexible investment regulation for Pension Funds Administrators in the country, allowing them to invest in a wide range of investment outlets in the years ahead.

Speaking at the Nigerian Private Equity Roundtable, organized by PenCom and the Commonwealth Secretariat, Ms Eyamba Henshaw, Commissioner, Technical, PenCom, said the Commission will adopt is the flexible investment regulation style as the Nigerian pension industry matures.

She, however, stated that investment activities of the PFAs must comply with the Regulations on Investment and Valuation of Pension Fund Assets, issued by PenCom, while it will still continue to regulate the costs and charges of investments to pension funds.

She noted that Pencom is committed to ensuring the safety of pension fund assets and that fair returns are earned on investments by PFAs.

Also, PenCom and the Commonwealth Secretariat both tasked Pension Funds Administrators, PFA, on the need to diversify their asset portfolio to including investing in private equity fund so as to take advantage of the numerous opportunities presented by the funds.

This is based on the inclusion of private equity, infrastructure financing (Debt Instruments and Funds) and supranational bonds, amongst others, as an allowable asset class for Nigerian pension funds by PenCom in December 2010.

Henshaw said that it has become imperative for pension funds to understand the workings of private equity funds and be properly positioned to tap into the benefits that investing in the funds presents.

She stated that investing in private equity funds will help pension funds administrators in the country reduce their risks and ensure improved returns.

Henshaw explained that the Pencom has undertaken the gradual expansion of allowable investment outlets for pension funds assets based on experiences in similar countries operating mandatory Defined Contribution, DC, Schemes. She said the expansion was premised on increased public confidence, financial market development and improved skills and knowledge of industry operators.

Also speaking, Mr. David Ashiagbor, Economic Adviser, Commonwealth Secretariat, London said that opportunities exist in private equity investment, especially with the rising profile of private equity in sub-Saharan African.

He said that fund raising activity in Sub-Saharan Africa has almost tripled from N121.6 billion (US$800 million) in 2005 to over N334.4 billion (US$2.2 billion) in 2008 and reached N228 billion (US$1.5 billion) in 2010.

Investment criteria put forward by PenCom to be considered by PFAs when investing in private equity, according to Henshaw, include that the private equity fund must have well defined and publicised investment objectives and strategies; satisfactory pre-defined and pre-disclosed liquidity and exit routes; the private equity funds and fund managers to be registered with Nigeria’s Securities & Exchange Commission, SEC, while key officers of the fund must possess a minimum of 10 years relevant experience in managing private equity investments.