Kuwait’s $124 Billion Pension Fund Plans Infrastructure Boost

Kuwait’s $124 billion pension fund, which posted a record first-half profit, plans to double its infrastructure investment and boost exposure to private equity, its director general said.

The new plan, developed with U.S.-based consultancy Mercer LLC, will start next year and will “entail increasing infrastructure from 5% to 10% as well as fine tuning some of the other allocations,” Meshal Al-Othman, who heads the Public Institution for Social Security, said in an interview with Bloomberg TV on Wednesday.

The fund is looking to raise private equity’s weight to 13% of its portfolio from 10% while lowering its allocation for equities to 22% from 27%, he said. Its cash currently accounts for 10% of the total, and the plan is to reduce it to 4% by March.

“We started off with a very high cash cushion, we still have a huge cushion,” he said.

The fund, which owns a quarter of U.S. private equity firm Stone Point Capital LLC, posted a 362% surge in first half profit to $12.1 billion. A new management team was brought into the fund in 2017 to transform the state-owned institution after its former head was found guilty of personally profiting from the organization over decades.

PIFSS, as the fund is known, also owns 25% of Oak Hill Advisors and 10% of TowerBrook Capital Partners LP. It is continuing a turnaround after cleaning up its portfolio to the tune of $20 billion and implementing a “precise and highly ambitious strategic allocation plan,” which took its cash down from 42%, Al-Othman said.

The fund, which is focused on developed markets, namely North America and Western Europe, sees plenty opportunities in infrastructure over the next few years especially in the U.S. where it “needs a lot of work.”

PIFSS is focused on the long term and looks at balance sheets, not necessarily stock charts, Al-Othman said.

Source: Bloomberg