Private Equity firms and Venture Capitalists that have access to pension funds will soon come under the regulatory regime of the Capital Markets Authority (CMA). This is to ensure the safety of funds belonging to the public.
The Retirements Benefits Authority (RBA) Act was amended to allow pension schemes to invest up to 10% of their assets in private equity funds and venture capital funds licensed by the Capital Markets Authority. However, these amendments did not incorporate the CMA to accommodate this arrangement.
“In this regard, I have proposed amendments to the Capital Market Act, to provide for the regulation of private equity and venture capital companies by the Authority,” said Treasury Cabinet Secretary Ukur Yatani while tabling this year’s budget estimates in Parliament.
Private equity funds invest in businesses ranging from SMEs and family-owned businesses through to large pan-regional businesses that operate in Kenya, in East Africa, or across the continent.
Venture capital funds purchase minority stakes in early-stage and fast-growing businesses and provide these businesses with capital to fuel continued expansion.
The Finance Bill 2020, tabled before Parliament, seeks to amend the CMA Act ( Cap. 485 A) to bring private equity and venture capital firms that access public funds (pension scheme funds) under the regulatory oversight of the Authority.
This is in line with the Cabinet Secretary’s policy pronouncement and intention in the 2015/16 Budget.
The Finance Bill 2020 was in early May 5th, 2020 tabled by Hon Joseph Limo, Chairman of the Departmental Committee on Finance and National Planning.