Eskom’s $10B Pension Fund will Diversify into Venture Capital

According to an official, the Eskom Pension and Provident Fund intends to diversify into venture capital to reduce its reliance on traditional investments.

The fund, linked to South Africa’s struggling state-owned power utility Eskom Holdings SOC Ltd., manages about 185 billion rands ($10 billion) in assets, roughly two-thirds allocated to South African stocks, inflation-linked debt, property, and nominal bonds.

Eskom Hld SOC Ltd, also known as Eskom, is a South African public utility that provides electricity. It was founded in 1923 as the Electricity Supply Commission (ESCOM), and it was also known as the Elektrisiteitsvoorsieningskommissie in Afrikaans (EVKOM). 

In the Southern African Power Pool, Eskom represents South Africa. The utility is Africa’s largest electricity producer and ranks among the world’s top utilities in generation capacity and sales. 

It is the largest state-owned enterprise in South Africa. Eskom operates several notable power stations, including Matimba and Medupi Power Stations in Lephalale, Kusile Power Station in Witbank, Kendal Power Station, and Africa’s only nuclear power plant, Koeberg Nuclear Power Station in the Western Cape Province.

Latest improvements to South African pension legislation allow funds to invest up to 45% of their assets offshore. The Eskom fund has a stake of around 30%.

“We are about to invest in venture capital, which is a subset of private equity,” said Phathutshedzo Mabogo, deputy chief investment officer of the fund. 

“We’ll start with the offshore development markets like North America and Europe. We’ve committed $100 million.”

“If we see a big opportunity like private equity offshore, we could move quicker,” he said. “The chances of us getting to 45% in the short term are very slim.”

With the closure of South Africa’s largest venture capital fund, the Naspers Foundry, in February, one would have hoped that the Eskom fund would have considered investing in local startups before looking for offshore investments.

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