State-run Government Service Insurance System said Wednesday it will set up a new infrastructure fund worth $400 million to expand its investment portfolio.
GSIS president and general manager Robert Vergara told reporters in a news briefing he would propose to the next set of officials of the fund the creation of Philippine Investment Alliance for Infrastructure 2.
“As I write my report on the deployment of that fund, I’ll probably be making a recommendation, or the GSIS financial group will be making a recommendation to the board that we set aside another sum of money into what looks to be a promising area of investment,” Vergara said.
“It’s undeniable that the country has to upgrade infrastructure. The many projects that have been identified is something we can look at if we are able to deploy further in this asset class,” Vergara said.
GSIS teamed up with Asian Development Bank, Dutch pension fund manager Algemene Pensioen Groep and Australia’s Macquarie Group to set up the $625-million PINAI fund to finance infrastructure projects in the Philippines.
“We will probably create another fund. Maybe it will be called PINAI 2. At least the same amount [with PINAI 1] but we will look at the kind of asset allocation and the portfolio it should have, if the available returns on other investments continue to be attractive as it is now,” Vergara said.
Vergara said the the initial $400-million investment could further be increased depending on prospective profit.
“Once the investments are made, then will revisit it and see whether investment proposition for at least core infra projects are still as attractive to the funds later,” he said.
GSIS said last year about 76 percent of the $412 million it committed to PINAI in 2012 had already been fully invested.
GSIS allocated $412 million for the program while ADB gave $25 million. APG and Macquarie raised $200 million while Macquarie Infrastructure and Real Assets was tasked to manage PINAI.
Vergara said with the way the financial markets were behaving in the early part of 2016, it was more risky to increase fixed-income allocations.
Vergara said, on the other hand, recent investments in several core infrastructure projects had started to gain attractive profit for the pension fund.
PINAI invested in wind and solar plants in Negros and Northern Luzon and became a part of the consortium extending the Light Rail Transit Line 1 from Baclaran to Cavite.
“With the investment in two solar power plants in Negros which we actually inaugurated two weeks ago, we have fully invested the portfolio and it’s already beginning to deliver gains on money that is being invested, so we have completed the investment of $400 million coming from the pension fund. Then we were able to raise additional $325 million from three other partners that haas now been fully committed and it’s quite interesting that…our investments are geographically placed across the country,” Vergara said.