PETALING JAYA: The Employees Provident Fund (EPF) has launched the first and largest syariah private equity (PE) direct/co-investment separate managed account (SMA) fund in the world with an allocation of US$600 million.
Through the allocation, the EPF will have three SMAs of US$200 million each to be managed by three private equity fund managers – BlackRock, HarbourVest Partners LLC, and Partners Group AG – with a global mandate that focuses on direct and co-investment strategies into growth and buyout transactions.
The investment period is from 2021 to 2025 while the fund term will run from 2021 to 2031, subject to further extensions with EPF’s consent.
Chief EPF officer Alizakri Alias said it is the first institutional investor to establish a syariah-compliant PE direct/co-investment fund and this is the largest of its kind globally, with a global investment mandate. The EPF has been working on this initiative since 2018 as it seeks to diversify its investment portfolio to ensure it can provide sustainable returns to members.
“The EPF has confidence in the three asset managers to carry out the direct and coinvestment activities on the fund’s behalf, as they have a long history of investing into private equity and several exposures in managing syariah-compliant mandates.”
The EPF’s PE arm has a global funds exposure with strategies covering growth, buyout, middle-market capitalised and large-market capitalised strategies totaling 106 active investments with a total commitment of US$12.05 billion. As of the second quarter of 2020, the top three regions in which EPF has invested under PE mandates are North America (42%), Europe (21%) and Greater China (12%).
The SMAs have appointed Amanie Advisors Ltd, Dubai and Zico Shariah Advisory Services Sdn Bhd as the syariah advisors to ensure that all investments are syariah-compliant. The SMAs were structured based on either a wakalah structure, or a combination of both wakalah and murabahah structures which will be subjected to syariah investment guidelines.