“We safeguard the fund by not allowing it to be under funded and not burdening the government with more liabilities.”
State pension fund Government Service Insurance System (GSIS) president and general manager Jesus Clint Aranas has committed P16.764 billion fund vehicle to finance private infrastructure projects in line with his effort to further diversify its assets and generate higher returns.
“This private fund vehicle works for us since we are able to successfully tap the expertise of experienced investors, which ensures a good risk-return profile for our investments,” Aranas said.
GSIS started making capital available for infrastructure development in the country in 2012, with its commitment to invest in the Philippine Investment Alliance for Infrastructure (PInAI), the first private equity fund earmarked for Philippine infrastructure projects.
Managed by Macquarie Group’s infrastructure asset management unit, Infrastructure and Real Assets, other investors to the fund are the Asian Development Bank, Algemene Pensione Groep (APG) of the Netherlands and the Macquarie Group.
Among the investments made under the investment alliance fund include the North Luzon Renewable Energy Corporation Wind Farm in Ilocos Norte; Negros Island Solar Power project spread across two sites in Negros Occidental; GN Power Kauswagan coal fire power plant in Kauswagan, Lanao del Norte, Mindanao; and a 45 MW solar power project in San Carlos City, Negros Occidental.
GSIS also invested in Coastal Storage facilities in the Subic Bay Freeport Zone and LRT 1 Metro, specifically, the operation and maintenance of the existing 20km LRT Line 1 for 32 years and construction of a 12 km extension south to Cavite.
As of end December 2017, the fund is almost fully deployed.
GSIS’s investments in the private fund yielded returns of more than 13% as of end 2017.
“The greater returns that this fund is generating helps GSIS to lengthen its actuarial life (currently at 35 years or until 2051 using 2016 yearend data) that will enable us to fulfill our current and future obligations to our members and pensioners,” Aranas said.
Toward this end, Aranas said that “GSIS will seek to diversify its investments in global assets, which will aid in managing the risk of GSIS’s investment portfolio.”
GSIS continues to redound benefits to its members by safeguarding the savings of the government workforce for their eventual retirement. “We safeguard the fund by not allowing it to be under funded and not burdening the government with more liabilities.”