Thai pension to up foreign private equity allocation

The Government Pension Fund of Thailand is planning to increase its foreign exposure across the asset classes and will focus on on the Asian markets in the near term.

Thailand’s Government Pension Fund (GPF) is upping its overseas investments, including private equity fund investments and direct investments in real estate and infrastructure, Sopawadee Lertmanaschai, GPF’s secretary-general, stated at a press briefing in Bangkok on Wednesday.

Though she gave no indication of how much the GPF would increase its exposure to foreign investments, she did say the THB335 billion ($10 billion; €7 billion) state fund would favour Asian markets in 2010 due to the region’s strong economic growth compared with other regions.

The GPF’s current allocation to private equity is unclear. As of December 2009, GPF allocates 3.61 percent and 4.08 percent of its assets to alternative investments and property respectively. Its allocation to alternatives underwent a slight increase from May 2009 when the figure stood at 3.5 percent.

The fund’s allocation to foreign investment is capped at 25 percent. Presently, it allocates 13 percent to foreign investment, of which between 9 percent and 10 percent are in foreign equities and the remaining are allocated to fixed-income instruments.

In June 2009, the state fund selected Switzerland-based private equity firm Capital Dynamics to oversee its first private equity nvestment strategy outside Thailand. The programme was allocated about 3 percent of its net asset value, worth about $330 million at the time, to be invested over three years.

At Wednesday's press conference, Lertmanaschai also said that from the third quarter of this year, the fund would implement a pilot project allowing civil servants to choose their personal investment priorities. For example, an investor may choose between higher risk equities or lower risk fixed income securities, depending on his risk appetite, she added.