Pension Fund Investment in Private Equities Soars by 299% Amid Search for Better Returns

In Nigeria, pension fund investments in private equity have surged dramatically by 298.7% in the past five years, growing from N39.08 billion in 2021 to N155.8 billion in 2025. This sharp rise comes as pension fund managers shift focus towards private equity markets, looking to secure better returns compared to traditional investment options like government securities and listed stocks. Despite a decline of 9.8% in 2022, investments in private equities have steadily increased, signaling a long-term trend towards diversification.

The Pension Fund Operators Association of Nigeria (PenOp) recently released data showing the upward trajectory of pension fund investments in private equity. Chief Executive Officer of PenOp, Mr. Oguche Agudah, explained that pension funds are increasingly moving into private markets to achieve higher returns that beat inflation. The appeal of private equity stems from its potential for stronger growth compared to more traditional and stable investment avenues.

Pension funds are no longer limited to investing in companies directly; instead, they are channeling funds into licensed private equity funds approved by the National Pension Commission (PenCom). These private equity funds then target sectors such as infrastructure, fintech, healthcare, agribusiness, real estate, manufacturing, and technology infrastructure. Notable examples of such funds include the Nigeria Infrastructure Debt Fund (NIDF) by Chapel Hill Denham and Sahel Capital’s FAFIN Fund.

The shift towards private equity represents a broader strategy by pension fund managers to diversify their portfolios. By branching out beyond government securities and listed stocks, fund managers aim to support Nigeria’s real economy while safeguarding the interests of pensioners. This diversification approach is especially critical given the challenges of low-interest rates and economic instability, which have prompted many pension funds to seek alternatives to traditional investment channels.

In conclusion, the sharp rise in pension fund investments in private equity reflects a growing trend among Nigerian fund managers to pursue higher, more diversified returns. By investing in critical sectors of the economy, they hope not only to secure more favorable financial outcomes for pensioners but also to contribute to the country’s economic development.

Source: Vanguard