Africa Investment Forum: Where Africa’s second largest pension fund is looking for value

The Eskom Pension & Provident Fund, one of Africa's largest pension funds, is strategically focusing on investing in projects that not only match their liabilities but also outperform them. In a recent interview with CNBC Africa, Linda Mateza, the Chief Executive and Principal Officer at the fund, highlighted the key aspects of their investment strategy and future plans amidst the current market volatility. Mateza emphasized that the fund's primary goal is to provide pension benefits to employees of Eskom, both past and present, while ensuring the sustainability of the fund into the future. As a defined benefit pension fund, Eskom Pension & Provident Fund follows a liability-driven investing approach at an overall portfolio level. This approach involves investing in a diversified range of asset classes such as equity, bonds, property, and cash, with a keen focus on generating returns and making a real impact on a socio-economic level. Mateza mentioned that the fund has already made direct investments in projects, particularly in the renewable energy space, based on selection criteria that align with their overall portfolio and diversification goals. Despite the challenging market landscape characterized by low returns and global economic slowdown, Mateza expressed confidence in the fund's long-term investment strategy. While acknowledging that meeting return targets in the current environment is tough, she highlighted their commitment to focusing on the long-term performance relative to their liabilities. Additionally, Eskom Pension & Provident Fund is actively diversifying away from listed markets towards real assets in a bid to explore new investment opportunities. When questioned about potential changes in their operations in light of Eskom's financial crisis and operational challenges, Mateza reiterated that the fund remains independent and focused on managing its liabilities regardless of external factors. She emphasized that the fund's responsibility lies in safeguarding the pensions of Eskom employees and ensuring the sustainability of the fund, irrespective of the utility company's situation. Mateza mentioned that the fund has conducted scenario modeling to prepare for various eventualities that may impact the fund's membership and financial position. Overall, the Eskom Pension & Provident Fund's investment strategy and future plans revolve around the core principles of matching liabilities, generating returns, making a positive impact, and ensuring long-term sustainability. Despite the market headwinds and uncertainties surrounding Eskom, the fund remains steadfast in its commitment to its members and prudent financial management practices.