In partnership with the US Agency for International Development (USAID), MiDA Advisors and the World Bank, the Batseta Council of Retirement Funds for South Africa (Batseta) on November 18 commemorated the Asset Owners Forum South Africa’s (AOFSA’s) first anniversary.

Speaking at the celebration, AOFSA chair Musa Mabesa, who is also principal executive officer of the Government Employees Pension Fund, noted that, since the forum’s launch in November 2021, it has exceeded its fundraising target by nearly seven times.

AOFSA was created to mobilise South African retirement funds to invest in infrastructure, real assets and other alternatives.

Mabesa explained that the forum is a consortium of prominent South African retirement funds that have come together to collaborate to make sustainable long-term impactful investments in the region, conduct necessary advocacy and engage with development finance institutions (DFIs), government and other partners on behalf of retirement funds.

AOFSA now has 13 funds forming the core membership base, thereby enabling retirement funds to collaboratively increase its awareness and allocations to infrastructure by creating opportunities for coinvestments.

“Since its establishment, AOFSA members have collectively committed R5.7-billion to infrastructure over the past 24 months. This has comfortably exceeded the R860-million target that we set out to achieve and is an indication of our members’ commitment to the objectives of the forum,” Mabesa outlined.

He highlighted that an important indicator for success had been to facilitate a commitment of R860-million out of $50-million in infrastructure investment.

Mabesa added that AOFSA had also proactively increased allocation to infrastructure and real assets through a pipeline of opportunities, direct engagement with funds and through consultant recommendations.

He said that, over the next five years, AOFSA aims to continue to mobilise considerable amounts of funds into infrastructure assets that will provide competitive reruns and diversification benefits to the member funds.

He added that AOFSA did not make investment decisions. “When considering the potential infrastructure projects, funds need to go through their own due diligence and governance process and make their own investment decisions.”

There is no pressure on a fund to make any investment. There are, for example, no investment quotas for funds or stipulations regarding investment quanta. Each fund has its own investment mandate and needs to match its requirements accordingly, taking appropriate member-centric decisions to invest responsibly in infrastructure and other real assets.

AOFSA has focused on this asset class, isolating infrastructural assets and piquing new conversation around such investments.

In formulating its request for information (RFI) process, AOFSA consulted with its member funds, as well as global partners MiDA Advisors and CrossBoundary.

It was noted to have followed industry best practice for conducting manager searches that is aimed at inclusion and consideration of all eligible managers looking for investment consideration with the AOFSA members.

AOFSA aims to foster engagement and outreach with retirement funds in other regions, from the US to Europe and Africa, and to engage in exchanges and discussions of best practices in the industry, finding ways of improving collaboration and co-investment opportunities.

It also plays an advocacy role with the government and other DFIs on policy-related matters such as the country’s investment strategy and Regulation 28 and in supporting initiatives such as the Just Energy Transition Partnership.

USAID has provided resources to support AOFSA’s implementation partners MiDA Advisors and CrossBoundary in providing advisory support, capacity building, and technical assistance to develop the Forum’s framework to unlock and mobilise private capital in South Africa.

With this technical support, a comprehensive pipeline of 64 projects for initial review was developed, then narrowed down for AOFSA’s consideration. Fund sponsors can reach out to AOFSA by using the RFI process on its website.

The World Bank provides support with capacity building and knowledge exchanges to enhance the benefits of infrastructure investments, Mabesa said.

“We are shaping the future of South Africa. Our investment targets for this period since launch have been surpassed. The multiplier effects of infrastructure projects on socioeconomic development and growth are well documented, which gives us considerable hope for the future.

“We are well on our way to achieving our goal of increasing the amounts invested by pooling assets from large and small retirement funds into long-term projects. All retirement funds within South Africa are welcome to join us on this journey,” Mabesa said.

He outlined the next steps for AOFSA as including strengthening its membership and expanding this to local and neighbouring country retirements funds.

It will also look to expand its relationships with relevant government agencies and other DFIs.

Moreover, it will collaborate with government and relevant partners on climate change solutions.

It would also continue seeking bankable opportunities in infrastructure and other alternatives.

AOFSA will also continue to support the transformation process and facilitate and engage with cross-border retirement funds and colleagues through several means.