South Africa's Eskom Pension and Provident Fund is set to allocate $100 million to venture capital as part of its strategy to diversify its investment portfolio, reduce dependence on traditional investments, and seek better returns.
The fund, which has around R185 billion ($10 billion) assets under management, currently allocates two-thirds of its funds to South African stocks, property, nominal bonds, and inflation-linked debt, reports Bloomberg.
The plan to invest in venture capital is in response to recent amendments in South Africa's pension legislation, allowing funds to invest as much as 45% of their assets offshore. However, the Eskom fund's offshore investment share is only around 30%.
The fund is expected to start its venture capital investments in offshore development markets, such as Europe and North America.
Despite this, the fund's exposure to private equity currently stands at 5 to 6% of its net asset value, and it has no immediate plans to increase its offshore private equity investments to the legislated 45%.
With the Naspers Foundry, South Africa's largest venture capital fund, closing in February, some might have hoped that the Eskom fund would invest in local startups before seeking offshore investments. However, the fund appears to be prioritizing offshore investments for now.