Pension Funds allowed to invest into Private Equity will boost local Investments

The Namibian Minister of Finance released a notice in respect of the amendments to Long-term Insurance Regulations: Long-Term Insurance Act No. 5 of 1998 and the Regulations for Pension Funds: Pension Funds Act No. 24 1956, effective 1 January 2014. The notice confirmed the substitution of certain regulations which among other things introduced:

# Unlisted Investments as a regulated asset class, which asset class was not regulated before.
# Statutory investment requirements. Regulations specify that “_Every registered insurer or reinsurer must invest 1.75 per cent of the market value of its investments in unlisted investments within a period of 12 months from the date of publication of the notice, but the unlisted investments may cumulatively not exceed 3.5 per cent of the market value of a registered insurer or reinsurer’s investments_”.
# NAMFISA Registration processes to be followed by entities that wish to manage unlisted investments as an Unlisted Investment Manager (UIM).
# NAMFISA Registration processes in respect of Special Purpose Vehicle (SPV) which must also be registered as funding is channelled through the SPV to the UIM.

According to the Pension Funds Act No. 24 1956 as amended from time to time “Unlisted Investment” means “_an investment that takes the form of prescribed equity or debt capital in a company incorporated in Namibia and not listed on any stock exchange._”

h3. Objectives

* Curb excessive capital outflows and encourage greater investments in Namibia by long-term insurers and pension funds.
* Instill investor confidence.
* Define the nature of the asset classes and create appropriate standards for fund management responsibilities in the market place.
* Provide an opportunity to increase economic activity in the Namibian economy through channeling institutional capital into the unlisted private company market.

Pension funds were given 12 months, starting 01 January 2014, to comply with the provisions of Regulation 28. As at 20 July 2015, NAMFISA received 53 applications for the registration of UIM’s and SPVs, of which 29 are for UIMs and 24 for SPVs. Of the applications received, the Registrar approved 11 UIMs and 10 SPVs, and rejected the applications of 8 UIMs and 10 SPVs. The remaining applications (10 UIMs and 4 SPVs) are currently under review. According to the NAMFISA 2015 Annual Report, it is estimated that close to N$3 billion will be allocated to this new asset class. The market expects the allocation by 31 December 2015.

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