GSIS to fully invest $400 M infra fund by June 2016

MANILA, Philippines - State-run Government Service Insurance System (GSIS) is set to fully disburse the $400 million fund it allocated for major infrastructure projects in the Philippines by June next year.

GSIS president and general manager Robert Vergara said about 76 percent of the $400 million it committed to Philippine Investment Alliance for Infrastructure (PINAI) three years ago has already been invested.

“I think we should by June 2016 be fully invested in the infrastructure fund,” Vergara said.

The GSIS partnered with Asian Development Bank (ADB), Dutch pension fund manager Algemene Pensioen Groep (APG), and Australia’s Macquarie Group in July 2012 to set up the $625 million PINAI fund to finance infrastructure projects in the Philippines.

GSIS allocated $400 million for the program while ADB gave $25 million. APG and Macquarie raised the $200 million while Macquarie Infrastructure and Real Assets (MIRA) was tasked to manage PINAI.

Vergara said the GSIS has agreed to extend by another year its investment in PINAI as only 60 percent of its total allocation were fully invested at the end of its third year last June.

“We hit that milestone in June 2015 when the fund was 60 percent invested. So we allowed the fund manager another year to invest,” he said.

According to Vergara, the infrastructure fund has been giving GSIS higher returns compared to its investments in government bonds.

“Suffice it to say we have been quite pleased. They do seem to generate the kinds of returns that we are targeting. There are some promising exits that we are looking at,” Vergara said.

Furthermore, the GSIS chief said the pension fund manager is looking at helping finance the crucial infrastructure projects including the Aquino administration’s public private partnership (PPP) projects to help the country sustain its robust economic growth.

“Given that the Philippines continues to require massive amounts of infrastructure, I think this portion of funds of GSIS could have a larger weight to it,” he said.

Under the Philippine Development Plan, the Philippines needs $120 billion to address its infrastructure bottlenecks in the medium term. Of the total amount, about 12 percent would be filled in by the private sector.