The State’s national pension fund is cashing in €600 million in overseas assets as part of a plan to reinvest the money in the Republic, according to a number of reports.
The Government intends to reinvest the €6.4 billion available in the National Pension Reserve Fund (NPRF) in infrastructure and commercial projects in the Republic over the next few years, under proposals announced in June.
According to a number of reports, the NPRF is in the process of putting €600 million worth of holdings in overseas private equity ventures on the market and has hired multi-national bank, UBS to sell the portfolio.
Redirect assets
The sale is one of the first taken to redirect the NPRF's assets to the new Irish Strategic Investment Fund (ISIF) , which will oversee their reinvestment in the Republic.
When the Government announced plans to establish the ISIF in June, it pledged that the new fund would deliver investment in areas of strategic importance to the Republic, "particularly in areas that support economic growth and job creation in the years ahead".
Infrastructure projects
The ISIF is likely to invest at least part of the cash in infrastructure projects, as the resources available to the Government for capital spending are limited.
The NPRF did not confirm or deny reports that it was preparing to cash in some of its overseas private equity holdings, but a spokesman pointed out that the Government has already announced that it intends “reorienting” the fund’s assets so that they can be used for investment at home.
"In line with this change to the fund's mandate, which will be the subject of legislation to be enacted by the Oireachtas, the NPRF will transition its global portfolio of equities, bonds and alternative assets into the ISIF over a number of years," he said.
The spokesman added that the NPRF does not comment on deals that it may be considering or that are already under way, but pointed out that completed transactions are announced as part of its regular “transparent fund reporting”.
The NPRF contributed €12.5 billion to the €85 billion bailout of the Republic organised by the EU/IMF troika in November 2010. This cash was part of an overall €17.5 billion contribution from the State’s own coffers.
Its €6.4 billion “discretionary portfolio” is essentially what remained in the fund after it was required to contribute to the bailout.
During the 2011 general election campaign, Labour pledged to use what was left in the fund to support job creation and infrastructure development in the Republic if it got in to government. Most of the €6.4 billion is held outside the Republic and is invested in a range of asset types. The process of transferring this to the ISIF will take several years.
Charlie McCreevy, who was finance minister in the Fianna Fáil/PD coalitions elected in 1997 and 2002 created the fund in 1999 to meet the Republic’s future liabilities to cover the cost of social welfare and State employee pensions.
