The Capital Markets Authority (CMA), Kenya Pension Funds Investment Consortium (KEPFIC) and the Nairobi Securities Exchange (NSE) have entered into an agreement to support infrastructure projects. This is through the capital markets.
KEPFIC and the Retirement Benefits Authority (RBA), recently introduced infrastructure as a distinct investment category under the pension fund investment regulations. This allows pension funds to directly invest up to 10% of their portfolio in the asset class, potentially unlocking approximately Ksh. 140 billion for infrastructure investments.
The MoU between CMA, KEPFIC and NSE will not only leverage economies of scale but also help in financing big-ticket infrastructural projects. The MoU will also provide an avenue for enhancing the liquidity of KEPFIC investments through the capital markets.
The CMA Chief Executive, Mr. Wyckliffe Shamiah observed that, “Through the partnership, NSE, CMA and KEPFIC will seek avenues to deploy pension funds’ investments into infrastructure projects. The three entities will use available capital markets products such as Green bonds, Asset-Backed Securities (ABS) and Real Estate Investment Trusts (REITs). The partnership will therefore cement the capital markets contributed to the Sustainable Development Goal Nine, by leveraging capital markets to build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation.”
The KEPFIC Chairperson, Mr. Sundeep Raichura added, “There is considerable need to utilize the appropriate capital market structures to finance the development of infrastructure in Kenya, whilst ensuring optimal returns and diversification to investors. We are excited to formalize this partnership which will enhance the transparency and liquidity of our members’ investments as well as pave the way for collaborative stakeholder engagements and capacity building initiatives pertaining to alternative assets in the capital markets.”