SOUTH AFRICA - Retirement funds of government institutions such as Telkom, Eskom and Transnet should be encouraged to invest in venture capital to support job-creation, according to Ron den Besten, general manager of Gensec Bank's private equity division.
Den Besten said that if fund members were to learn how venture capital investment can lead to job creation and skills transfer they would pressurise trustees to include the asset class in their funds.
Unlike subsidies where the donor never sees a return on his investment, experienced venture capitalists provide their investors with returns which can in turn be reinvested in other projects and give our economy a much-needed kick-start”, said den Besten.
In South Africa in the main it is the private sector that has committed funds to venture capital and private equity projects. At this stage the private sector's commitment stands at over R26bn and it is time for the Government to come to the party.
Den Besten explained that venture capital investment tends to be a longer term asset class and investors need to accept a five year time horizon.
“Asset managers on the other hand tend to have a shorter investment time horizon and attach great importance to the liquidity of an investment”, he added.
“This means that venture capitalists have to seek other investors, investors like the government, which can afford to wait for a few years for its return.
By Janet Du Chenne
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