Thailand’s GPF keen to expand PE allocation, tie-ups
Thailand’s Government Pension Fund (GPF) plans to expand its private equity programme and is also considering partnerships with other institutional investors in projects that do environmental or social good, a senior executive told AsianInvestor.
“We are looking at expanding our private equity programme,” said Man Juttijudata, deputy secretary general responsible for investment strategy, outsourcing fund management and sustainable investments at GPF.
Juttijudata was also selected as AsianInvestor’s Top 20 pension executives in Asia earlier this year.
Ongoing interest in private equity is a trend that AsianInvestor has observed with several asset owners, even though fund raising in private equity markets in Asia has slowed in 2023.
INTEGRATING ESG WITH PE
The $13 billion pension fund has about 4% of its investment portfolio in private equity, domestic and overseas.
About 22.4% is invested in alternatives, including real estate, infrastructure, commodities and gold.
“In private markets allocation, we focus on investing in growing sectors that stand to benefit from long-term secular trends such as digitalisation, climate solutions and energy transition, and supply chain reconfiguration,” Juttijudata told AsianInvestor.
“We also put our focus on integrating ESG across private markets to bring another better ecosystem to society, while maintaining good return objectives along with social benefits.”
Asia Pacific private capital fundraising in the second quarter climbed from the previous quarter, driven mainly by private equity and real estate funds, according to alternative assets tracker Preqin.
PE fund raising by APAC focused funds in the April to June quarter reached $5.6 billion, up from $2.7 billion in the previous three months.
Nevertheless, the total for the first half of 2023 is only 22% of what was raised in 2022. This year could see the lowest fundraising for APAC in a decade, Preqin said in a July update.
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PAN ASIA SCOPE
GPF believes there are enough opportunities in private markets for the fund, since the ticket size of its investments are not so large that it crowds out other investors while pressuring returns.
“We are a medium-sized pension fund so there are plenty of projects in infrastructure and private equity available, so we can get a good margin on that,” he said.
There's another reason why equity, both private and public, is under greater consideration for GPF: The pension fund introduced a member investment plan choice in 2013 called the Life Path Plan, which allocates money into asset classes based on a member’s age.
For very young members, equity asset allocations can go as high as 75%, although that proportion reduces as they grow older.
However, since this option allows for greater equity allocations, the overall investment pool of GPF also needs to make higher allocations to equity markets, public and private.
“The fund will definitely need to consider options in equity, especially private equity, and even more so if they provide a strong social or economic impact,” said Juttijudata.
As with all its investments, sustainability considerations remain at the fore for the public pension fund.
He noted that with public market investments, the limitation is that companies already have already mapped out their ESG or sustainability plans and the decision is really to choose companies with the best plans.
“Where we are likely to make a greater impact is when we go directly via the private equity route.”
The state-owned pension fund is also interested in tie-ups with institutional investors, such as pension funds in other markets, to participate in projects that are geared towards promoting environmental and social causes.
“We would look at opportunities across the region,” Juttijudata said, adding that when the fund meets with other pension funds in other regional markets, there have been conversations about co-investments.
“We don’t want to manage or control the project, but we are happy to support them in making a good impact on society.”
Juttijudata has previously told AsianInvestor about GPF's strong focus on ESG and that the fund even incorporates ESG into its performance assessment of external managers.