Nasfund: Massive investable cash flow

NATIONAL superfund Nasfund collects about K20 million monthly in new contributions and pays out K10 million monthly in unemployment, housing and retirement benefits,   joint-chief executive officer Rod Mitchell has disclosed.
“Net investable cash flow from contributions sits around K120 million per year. Add investment income (not capital gains) of a further K50 million and you can see that free cash flow amounts to around K170 million per year,” Mr Mitchell noted.
He said combined with the skewed demographics of a young and growing formal private sector population, two conclusions could be arrived at: Substantial cash flow needed to be invested yearly in a country with no unlimited investment opportunities; and long-term investment opportunities should be considered because its membership base was relatively young.
Mr Mitchell revealed this last Tuesday during a function for the public private partnership (PPP) at Crowne Plaza hotel in Port Moresby.
He spoke on financing role of the superannuation industry in PPP.
Mr Mitchell said the financing role of the superannuation industry is an important part of any PPP structure simply because with over K4.5 billion in assets and representing the formal work force of PNG, they could not be ignored.
“Superannuation currently is the largest non-bank group of capital formation in PNG and this can only gain traction over time,” he said.
Mr Mitchell said similarly any grouping of investors (especially with an overseas component that brings capital, expertise and access to new technologies), would naturally find it difficult to walk in and take equity, unless it had some local investor component.
He said including a superannuation fund, like Nasfund, in a PPP from a foreign investor’s point of view, brought a number of important elements to the table including greater recognition by government of the investor, as local non-government equity was deemed positive.
He said there remained the current prevailing nationalist sentiment: That foreign players, who wish entry, face lack of contacts within the machinery of State which Nasfund could facilitate; and foreign entrants faced exposure to exchange rate risk on currency brought in country for investment.
 “Nasfund being a local institution does not face that direct risk and can provide a useful less-risky form of capital raising,” Mr Mitchell said.