Unlisted Investments

In line with Regulation 28 of the Pension Funds Act, pension funds are required to hold a minimum of 35% of their investments in Namibian assets with the maximum of 3.5% in unlisted investments.

Through this legislation, pension funds are encouraged to invest in the domestic market and so as to ensure that Namibian savings are utilized to stimulate development.

By way of responding to this call, GIPF approved an Investment Policy for Unlisted Investments in 2008. The overarching objective of this policy is therefore to make a meaningful contribution to the economy and development needs of communities by providing development capital to the non-listed sectors with high growth potential. These sectors include micro-financing, venture capital, development capital, buyout financing and property which falls out of the unlisted investment categories in terms of Regulation 29.

Within the spirit of this policy, the Fund has adopted a broad-based view to socio-economic development through private equity, a relatively new investment concept to Namibia which could enhance our ability to capture significant performance while leaping diversification benefits.

Given the risk associated with unlisted investments, the development of this policy took into consideration detailed studies of global best practices in this area. We believe that through this policy we able to innovate and create alternative asset class for investments of pension fund’s assets. As is evident the GIPF Unlisted investment policy has recorded success in job creation, infrastructure development and general economic growth. The ripple effect our investments into this asset class is the multiplication of business entrepreneurs, an increase in the critical mass of sustainable businesses and stimulation of market activities.

Despite these remarkable benefits, we also believe that this policy allows us to better manage our investment risk through diversification of our asset portfolios. Surely, the risk of carrying all eggs in one basket is minimized when some assets are withheld from volatile listed markets.

We are very proud to be a pioneer of this concept in Namibia and we are of the view that the impact of our investments in this area would be robust and sustainable. It should also be noted that even though our unlisted investment objectives are developmental in nature, the protection and growth of our assets remains top priority.

Evolution of Alternative Investments 2015-2022
Evolution of Alternative Investments 1996-2014

The operational framework is designed to minimise risk by making use of professionals with specialised expertise in particular investment mandates. In terms of this set up, individuals with projects requiring finance shall not approach the Fund directly, but approach these service providers (Fund Managers) who have been appointment by the Fund for this purpose.

Moreover, the funds under the unlisted investment portfolio are housed in legal vehicles called a Bewind Trusts. The disbursement of GIPF funds to projects is done via these trusts on the basis of a draw down principle rather than the total value allocated to the Trusts. Moreover any draw down could only be authorized after investment proposals have been thoroughly investigated and appraised. Some benefits associated with this arrangement are as follows:

  1. The funds invested by the GIPF remain the property of the GIPF.
  2. It allows for a tax look-through structure. All profits generated will be subject to tax, if applicable, in the hands of the investors, not the Trust. Other investors may also participate in the fund. This is to enable other pension funds, long-term insurers, foreign investors and, indeed, individuals to also participate. It is hoped that this will mobiles capital.
  3. Very onerous governance principles.
  4. The right of the GIPF to terminate a manager and appoint another in case of any diversion from mandates.
    A number of Fund managers with specialties in areas of private equity, venture capital, debt and infrastructure financing have been appointed through public tender to participate as intermediaries and manage the allocated funds in line with GIPF objectives.