GSIS allots $300M for PPP infra fund

MANILA, Philippines - The Government Service Insurance System (GSIS), the state-run pension fund for public employees, is pouring in roughly $300 million to a planned infrastructure fund which can reach up to $750 million.

In a press briefing yesterday, GSIS president and general manager Roberto Vergara said the agency may contribute $300 million to the fund which would help finance the government’s Public-Private Partnership (PPP) program for infrastructure.

The STAR earlier reported that GSIS is eyeing to work with the Asian Development Bank and the International Finance Corp. to set up a $500-million to $750-million infrastructure fund for the government’s PPP projects.

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

“We’re trying to set up the fund with multilateral agencies. We’re going to put in $300 million,” Vergara pointed out.

He said the overall goal is to generate returns of at least nine percent to 15 percent a year for GSIS to make the investments worthwhile for its members.

Vergara said that GSIS and its partner multilateral agencies are eyeing to select a fund manager by the end of February.

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 pour more funds in the local equities market, particularly in power and infrastructure stocks.

Vergara said it is possible the pension fund would double its equity exposure in stocks over the next 12 months from where they are at present.

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

During the same briefing, Vergara reported that the agency’s unaudited net income last year rose to P57.5 billion, an increase of 24 percent or P11.2 billion compared to the P46.3 billion reported in 2010.

For this year, Vergara said net income may grow roughly 10 percent to P60 to P65 billion as GSIS continues to boost its investments.