Thailand’s GPF Plans to Expand Private Equity Allocation

Thailand’s Government Pension Fund (GPF) is looking to expand its private equity (PE) allocation and is considering partnerships with other institutional investors to invest in projects that promote environmental or social good.

Private Equity News Thailand

Thailands GPF Plans to Expand Private Equity Allocation

The $14.2 billion pension fund has about 22% of its investment portfolio in alternative assets, including private equity, infrastructure, commodities, and gold. GPF’s senior executive has expressed interest in increasing the allocation further towards the private markets.

As of September 30, 2022, GPF’s investment portfolio was worth Bt462.4 billion, and the fund aims to diversify further overseas. GPF is keen on exploring opportunities in the private equity space to enhance its returns and expand its portfolio.

The fund’s move towards private equity is in line with the industry trend, where institutional investors are increasingly allocating more towards private markets to achieve higher returns.

The GPF’s move towards private equity comes as bonds no longer guarantee the same returns they did a decade ago.

With interest rates at historic lows, investors are looking for alternative investments that offer higher returns, such as private equity. The GPF’s allocation towards private equity is expected to increase as the pension fund seeks to generate higher returns and diversify its portfolio.

GPF’s Current Private Equity Allocation

Thailand’s $13 billion pension fund, GPF, has been actively seeking to expand its private equity allocation in recent years. As of September 2022, GPF had about 4% of its investment portfolio invested in private equity, both domestic and overseas, according to Asian Investor.

GPF’s asset allocation strategy has been evolving over the years, with a growing focus on alternative assets. As of September 2022, about 22.4% of GPF’s portfolio was invested in alternatives, including real estate, infrastructure, commodities, and gold. Private equity is a key component of GPF’s alternative asset allocation.

GPF’s private equity allocation has been growing steadily over the years. In March 2016, GPF was given the green light to raise its offshore allocation limit to 30% from 25%, according to Asian Investor. By September 2022, GPF’s private market allocation had reached 23.61% of the total portfolio.

GPF’s Chief Investment Strategy Officer, Hans Poulsen, has stated that the pension fund is employing a mix of tactical and strategic asset allocations to grow and protect its portfolio amid market uncertainties, according to Asian Investor. Private equity is seen as a key component of GPF’s long-term investment strategy, providing the potential for higher returns and diversification benefits.

GPF’s strong focus on Environmental, Social, and Governance (ESG) considerations is also reflected in its private equity investment strategy. GPF incorporates ESG into its performance assessment of external managers, according to BEAMSTART.

Overall, GPF’s current private equity allocation is a small but growing component of its investment portfolio. As a long-term investor, GPF is actively seeking to expand its private equity allocation and forge new tie-ups in the sector.

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