NSSF targets private equity as it eyes Sh1 trillion in net assets

The National Social Security Fund is now eyeing private equity funds in its push to diversify its investment portfolio, targeting to hit Sh1 trillion in net assets by next year.

This is up from the current $5.7 billion portfolio (about Sh737.6 billion) in Assets Under Management, having grown from Sh575 billion at the close of the 2024-25 fiscal year.

Speaking during a forum held by Kuramo Capital Management that brought together pension funds, Development Finance Institutions and captains of industry, NSSF Managing Trustee, David Koros, said private equity with firms such as Kuramo are a top priority.

The move, he said, is based on the current industry trends where pension funds are expanding beyond traditional government securities, bonds and property.

This is due to stagnant or low returns in these sectors, with NSSF now eyeing more infrastructure projects and expansion into other sectors of the economy.

“Pension funds are now looking for portfolios that give them consistent returns over time. The main driver has been returns and the traditional sources are drying up. That is why they are looking for new opportunities,” said Koros. 

The fund targets a portfolio of at least Sh1 trillion by the end of next year which Koros said will be driven by partnerships. Pension funds have been very conservative, but in the last few years they are beginning to assume certain level of moderate risks, and that opens room for exploration into other sectors,” he said.

"We are looking to diversify into as many sectors and portfolios as possible. We are looking for partnerships, PE funds that will help us diversify and invest in the real sectors of the economy.”

Kuramo Capital– Co-CEO, Shaka Kariuki, said the firm remains bullish in the Kenyan market, with Infrastructure being a key investment sector.

“” We also continue see and make investments in sectors such as financial services, consumer-related sector, agri-space, among others and from an investment firm point, Kenya is the top destination for capital in Africa,” Shaka said.

To date, Kuramo Capital has catalyzed over $3.5 billion (Sh452.9 billion) to Sub-Sahara African businesses in 30 countries , which has also created more than 650,000 jobs.

In Kenya, the firm, which has strong backing, including from the US government and institutions, has deployed over $250 million (Sh32.3 billion) across key sectors of the economy.

Its GenAfrica Asset Managers manages parts of US Embassies.

The firm also serves as an anchor investor in 15 first-time indigenous private equity funds, revolutionising the PE space in Africa that has previously been dominated by foreign funds.

A private equity (PE) fund is a pooled investment vehicle that raises capital from institutional investors and high-net-worth individuals to acquire, restructure, and grow private companies.

US Embassy Chargé d'Affaires Susan Burns lauded Kenya for creating a good investment climate, even as she backed NSSF’s diversification move.

“I believe that Kenya’s success will not be just for the country but for the East African region and beyond,” said Burns, noting that Kenya has been a leading destination for private equity and venture capital in Africa in the last three years.

“This represents Kenya’s diversity, entrepreneurship spirit, and its commitment to create an environment where capital can work,” she said.

 NSSF’s target on PEs comes on the back of its recent move to invest in the Sh170 billion Rironi–Mau Summit highway, where it has taken a 40 per cent stake.

The project is a public-private partnership, with 75 per cent financed through concessional debt by China Road and Bridge Corporation (CRBC) and the remaining equity shared between NSSF and CRBC.

NSSF projects a yearly return of 18 per cent over the next 28 years through its stake, a major public-private partnership project.

It is also developing a Sh30 billion- 60-storey twin towers building in Nairobi’s Central Business District, expected to further grow its portfolio and returns to pensioners.

“Private equity is the way to go. Africa and more sore Kenya, we have been laid back but we have now taken the bold move, expanding the horizons in matters of investments,” said Koros.