The partnership event was held to discuss the implications of the co-investment framework for PFAs and Private Equity Fund Managers with the purpose of breaking down the new PENCOM guideline, showcase live co-investment transaction process, and address the legal implications and potential bottlenecks that may arise with the aim of driving increased participation of pension funds in the private equity asset class.
The Private Equity and Venture Capital Association of Nigeria (PEVCA) in collaboration with the Pension Fund Operators Association of Nigeria (PenOp) hosted a breakfast workshop on the 6th of July 2022, at the Four Points Hotel in Victoria Island, Lagos, to discuss “The Implications of the Framework on Co-investments by Pension Fund Administrators”.
The workshop, which was well attended, brought together members of the PEVCA and PenOp community, including private equity and venture capital fund managers, pension fund administrators, law firms, ecosystem service providers, and other stakeholders. The interactive session included presentations from facilitators, Mr. Danladi Veheijen (Managing Partner, VEROD), Mrs. Ijeoma Agboti-Obatoyinbo (Managing Director, FBNQuest Funds), and Mrs. Ozofu Ogiemudia (Partner, Udo Udoma and Belo Osagie), with audience participation moderated by Mr. Oguche Agudah (CEO, PenOp).
A case study of a co-investment transaction was presented by Mrs. Agboti-Obatoyinbo, who gave a breakdown of the transaction structure used, the considerations and documentations required, as well as the benefits of the structure to the co-investors. Mrs. Ogiemudia highlighted the legal implications of the Framework, while also drawing attention to potential bottlenecks which may impede the desired outcome. She concluded her presentation by suggesting recommendations which stakeholders could engage PenCom on for revisions to the Framework. Providing an outlook for the Private Equity asset class in Nigeria, Mr. Verheijen in his presentation, emphasised that this is the best time for PFAs to consider investments in PE and co-investment opportunities for various reasons including local opportunities, valuation levels and the experience of current private equity firms.
The general feedback from the workshop attendees was that the Framework is a welcome development, the impact of which will be determined over time. There is a desire to see increased participation of Pension Funds in Private Equity, and the Framework presents a new opportunity for PFAs to invest in the asset class and addresses some of the earlier limitations to such investments.
Anna Evi-Parker, Executive Secretary, PEVCA said: “One of our goals at PEVCA – and a major concern for a lot of our members – has been to unlock more local capital into private equity funds. In the last few years, we have been engaging with the PFA community through PenOp on ways to get more pension fund allocation into the asset class. Although the co-investment framework is not without its bottlenecks, it is a welcome development that offers PFAs a new path to investment in PE. Our hope is that this framework is a catalyst that encourages co-investments between PFAs and PE funds, boosting investments in the asset class and improves overall returns on pension fund investments in private equity.”
Oguche Agudah, Chief Executive officer (CEO), PenOp said: “The approval and subsequent release of this co-investment framework for pension funds has been a long journey. From engaging our members, the private equity community and the regulators to fashioning out something that all parties can engage with. We believe this will be a catalyst that will spark more investments into private equity and ultimately more companies to help with boosting real returns for pension funds and their contributors and also developing the local economy as a whole”.