GSIS pools fund with ADB, IFC to invest up to $750 M in PPP

MANILA, Philippines - The Government Service Insurance System (GSIS), together with the Asian Development Bank (ADB) and the International Finance Corp. (IFC), is preparing to invest up to $750 million in the government’s infrastructure projects under its public-private partnership (PPP) program.

GSIS president and general manager Roberto Vergara said the three institutions are already threshing out the details of the infrastructure fund.

“We are working with IFC and ADB. Together we can put up half a billion to three-fourths of a billion dollars. Together the three of us can invest in some of the infrastructure projects the government might be bidding out,” Vergara told The STAR Friday night.

Vergara said the move is part of GSIS’ efforts to “build our equity weightings.” He also believes that investing in the government’s infrastructure projects would translate to higher yields for the pension fund.

“We will be investing. We won’t be a lender. We’re targeting returns in double digits, something we don’t get in government funds. This is over a long period of time, which is 10 to 15 years,” Vergara said.

The overall goal is to generate return of at least nine percent a year for GSIS to make the investments worthwhile for its members.

The Aquino administration launched in 2010 its PPP program, aimed at attracting private sector participation to fund infrastructure projects such as airports and roads.

Aside from the PPP projects, GSIS is also eyeing to invest more funds in the local equities market, particularly in power and infrastructure stocks.

He said it is possible the pension fund would double its equity exposure in stocks over the next twelve months from where they are at present.

Vergara said the GSIS would likely double their equity exposure over the course of the next 12 months from where they are at present.

Last year, the pension fund decided to unwind its entire $670 million it has invested abroad.