GSIS mulls new $400-M fund for infra

For power, mass transit, water projects

MANILA, Philippines – State-run Government Service Insurance System (GSIS) is planning to set up another $400-million fund for major infrastructure projects after its successful foray into the sector almost four years ago.

GSIS president and general manager Robert Vergara said in a press conference he would recommend the creation of another fund for infrastructure projects after disbursing the entire $400 million commitment to the Philippine Investment Alliance for Infrastructure (PINAI).

“We will probably create another fund. Maybe it will be called PINAI 2. We are looking at least the same amount,” Vergara said.

GSIS partnered with Asian Development Bank (ADB), Dutch pension fund manager Algemene Pensioen Groep (APG), and Australia’s Macquarie Group to set up the $625 million PINAI fund to finance infrastructure projects in the Philippines.

GSIS allocated $400 million for the program while ADB contributed $25 million. APG and Macquarie raised the $200 million while Macquarie Infrastructure and Real Assets (MIRA) was tasked to manage PINAI.

“Maybe we will start with another $400 million and see whether there is reason to ramp the figure a little higher. There is no point in going up to gigantic number,” Vergara said.

Vergara said, the additional funds would be invested in core infrastructure projects such as power, mass transit through light rail transit (LRT), and water projects.

“There is a lot of very good projects and so If we were to earmark another $400 million or $500 million it would not be that difficult to deploy given  the needs of the country for theses types of infrastructure,” Vergara said.

According to him, the infrastructure fund has been giving GSIS higher returns compared to its investments in government bonds.

“In 2011, when we were putting this together, we thought of a 12 percent target will be a good starting point. Some of the investments are generating returns, some are in the investment phase,” he said.

PINAI is being invested in transportation, energy, power, water, environment, communications as well as other PPP investment opportunities.

Furthermore, Vergara said the pension fund manager is looking at helping finance the crucial infrastructure projects including the Aquino administration’s public private partnership (PPP) program to help the country sustain its economic growth.

Earnings of GSIS plunged 65 percent to P48.85 billion last year from P140.22 billion in 2014 after incurring a P2.5 billion loss from financial assets compared to a P124.5 billion gain recorded in 2014.

The sharp decline in profits was attributed to the volatile global financial markets as well as its failure to dispose any major property last year.

The GSIS chief sees the pension fund’s assets hitting P1 trillion this year after increasing by 5.8 percent to P960.1 billion last year from P907.1 billion in 2014.