The Southern African Venture Capital and Private Equity Association (SAVCA) welcomes the recently published final amendments to Regulation 28 of the Pension Funds Act, which comes into effect on 3 January 2023.

National Treasury has said that: “To further facilitate the investment in infrastructure and economic development, the limit between hedge funds and private equity has been split. There will now be a separate and higher allocation to private equity assets, which is 15% increased from 10%.”

These amendments speak to the urgent need for increased investment into infrastructure, for example, which has been highlighted most recently by the high levels of load shedding the country has been experiencing.

“We welcome this decision as it will enhance opportunities for retirement funds to diversify portfolio allocations, generate returns for their members and positively impact on the growth of the economy and job creation,” says Shelley Lotz, Head of Policy and Regulatory at SAVCA.

The amendments to Regulation 28 will further provide an enabling environment for retirement funds to increase their allocation to investments that provide clear impact and ESG outcomes.  The impact and ESG strength in Private Equity also cannot be ignored, as investors are increasingly looking for investments which create positive impact outcomes for investors looking to make a difference in the South African economy. This means that the focus on investment is not just for financial returns, but that the real economy can be reached through investments with a focus on good corporate governance and uplifting communities.

Lotz continues: “We are excited about the economic impact that could be created through National Treasury enabling greater private sector investment into key growth areas of the economy. The Private Equity industry is a significant and valuable investment arm into South Africa’s real economy, and we have no doubt that these amendments will allow for greater investments into the asset class”.