The implementation of new regulations requiring institutional investors to invest a minimum percentage of their assets into unlisted assets in Namibia is set to provide a significant boost to private equity in the country. Van der Merwe, Chief Executive Officer of the Southern African Venture Capital and Private Equity Association (SAVCA) said that the private equity market in Namibia is relatively untapped. She also cautioned that new regulations will now provide Namibia long-term insurance companies and pension funds with the incentive to take advantage of this still-under utilised alternative asset class.
According to the new regulations, long-term insurance companies and pension funds must now invest a minimum of 1.75% of their market values domestically into unlisted investments, with a maximum investment of 3.5%. This is a new asset class introduced by Regulations 28 and 29, since exposure to this asset class was not previously regulated.
According to Daudi Mtonga, Director at the private equity firm VPB and a SAVCA member, the above will give investors comfort that the capital allocated will be under the Regulator’s supervision, given that the nature of the asset class is clearly defined.
He added that these regulations also form part of the Namibian government’s efforts to curb the outflow of capital and provide access to capital for domestic investment opportunities, which currently struggle to get access to funding, be it risk capital or debt funding. Van der Merwe is of the view that this change will provide an opportunity to increase economic activity in the Namibian economy by channeling institutional capital into the unlisted private company market. This asset class will act as a catalyst for the growth of the economy.
Source: Africa Outlook
Posted on: November 15, 2015