IRELAND - The e15.3bn National Pensions Reserve Fund (NPRF) has revealed plans to invest a portion of its global private equity allocation into Irish venture capitalist funds.
The allocation will be derived from the e2bn set aside in 2005 for investment in global private equities by end 2009, by which point the fund intends to have a global private equity allocation of 8%.
A spokesman for the NPRF said: “We are phasing into the asset class as we source suitable funds. Irish venture capital funds are expected to be raising money in 2006 and we are interested in investing in that sector.”
But he did not reveal the size of the allocation to be made, or which funds were under consideration for investment.
“I can’t be specific at the time being,” he said. “The amount is likely to be significant in itself while relatively small in the context of our global allocation, given the relative size of the Irish market.”
Evelyn Ryder, an investment consultant at Hewitt Associates in Ireland, said the potential allocation would be at the “lower end”.
Previous Irish legislation, since repealed, had obliged Irish pension funds to invest 1% of their assets into Irish venture capital, she added.
But while many of these investments still stand because they haven’t been fully realised, Ryder said the returns had not been significant.
“They have done okay but a lot have found it was probably too small an investment to have any significant value. And now, because they can’t disinvest from them, they haven’t done phenomenally well.”
“The NPRF is new so the legislation would have been prior to them coming into being.”
Asked why the NPRF has decided to pursue the strategy to invest in Irish venture capital, the spokesman said:
“Two reasons. One we are keen to invest in Ireland in the areas that we can get a commercial return. Secondly, market knowledge is an important factor in investment in venture capital so clearly there are advantages in investing in one’s local market.”
As of end 2005, the NPRF had committed e180m to international private equity investments, of which e8m was drawn down.
The fund grew by e3.6bn from e11.7bn at end 2004 (9.5% of GNP) to e15.3bn at 30 December (11.4% of GNP).
It earned a return of 19.2% in 2005, which it said reflected the fund’s heavy concentration in equities and the sustained rally in world equity markets.
The NPRF was established in April 2001 under the National Pensions Reserve Fund Act 2000 to meet the costs of social welfare and public service pensions from 2025 onwards.
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