US - The Kansas senate yesterday approved a bill which would require the US$12bn Kansas Public Employees Retirement System (KPERS) to divest from "companies with business operations in Sudan".
Although KPERS has no direct holdings in Sudan, its portfolio includes around $38m (equivalent to 0.29% of the total portfolio) invested in companies linked to the war-torn African nation.
The bill, which was pushed forward by senate majority leader, Derek Schmidt, would force KPERS to divest from those companies, “except in the case of passively managed commingled funds when the estimated costs of divestment exceeds a threshold test”.
The bill would also require KPERS executive director, Glenn Deck, to prepare a report for the 2008 Legislature detailing the financial impact on KPERS of divestment from companies with links to Cuba, Iran, North Korea and Syria – all countries with governments designated by the US Department of State to be “state sponsors of terror”.
KPERS has estimated enactment of the Sudan-divestment bill would cost it between $40,000 and $185,000 in one-time transaction costs, as well as between $455,000 and $460,000 in annual management fees. The pension fund would also need additional investment staff time to monitor the list of prohibited investments.
Earlier in March, it was announced Florida’s US$118bn state pension fund could be forced to divest from any companies linked to Sudan, should a new bill by Senator Ted Deutch be passed.
Divestment from Sudan cost Illinois Teachers' Retirement System (TRS), one of the first in a line of US pension funds to boycott the nation, US$1.78m – excluding lost opportunity costs from private equity – in the first half of 2006.
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