Pension funds are increasingly being encouraged to diversify their investment portfolios beyond traditional government securities into private equity and venture capital as stakeholders seek to unlock long-term financing for Ghana's small and medium-sized enterprises (SMEs).

This formed the focus of the Ghana Venture Capital and Private Equity Association (GVCA) Limited Partner (LP) and Pension Industry Roundtable, held last week in partnership with the Ghana Investment Support Programme (GhISP) and Stanbic Investment Management Services (SIMS).

Top pension funds and advisory experts in attendance included GCB Trustees Dr Suzy Puplampu and Martin Nantwi, with the roundtable led by Kwabena Boamah, Managing Director of SIMS.

The roundtable brought together pension trustees, regulators, policymakers, institutional investors, fund managers and development partners to examine the practical considerations, governance structures, and investment strategies that underpin private capital investing.

The discussions centred on strengthening confidence among pension trustees as they gradually transition from predominantly investing in government bonds to allocating a portion of their portfolios to private capital, a move expected to deepen Ghana's capital markets while supporting the growth of high-potential businesses.

Building confidence in private capital

A recurring theme throughout the session was the role of GVCA in bridging the knowledge gap between regulators, institutional investors, and private capital fund managers.

Amma Gyampo, CEO of GVCA, commented on the activities and mandate of the industry body: “By facilitating dialogue, promoting industry standards, and demystifying private equity and venture capital structures, the association continues to support the development of Ghana's private capital ecosystem.

Our work spans ecosystem coordination, policy advocacy, and market development, all aimed at increasing the flow of long-term institutional capital into productive sectors of the economy. We continue to build upon GVCA’s 5% Pension and Insurance Industry Compact, which we launched in 2025 at our annual industry conference, working with pension and industry decision-makers and risk and investment officers on the opportunities this asset class has to offer.”

Strengthening due diligence

Participants underscored that robust due diligence remains central to managing investment risk, particularly in African markets where reliable private company data can be limited.

Private equity fund managers therefore rely on multiple layers of analysis before committing capital. This includes mapping leading companies across sectors and using publicly listed firms as benchmarks to understand market trends and growth potential.

Recognising the shortage of reliable consumer and business data across the continent, GVCA is also collaborating with ecosystem partners to improve access to primary market intelligence. Greater availability of granular data is expected to enhance investment decision-making for private equity and venture capital firms, entrepreneurs, and institutional investors alike.

Comprehensive financial, legal, tax, and Environmental, Social, and Governance (ESG) assessments are also standard practice before investments are approved. These reviews are typically undertaken by internationally recognized professional services firms to provide independent validation of investment opportunities.

To strengthen accountability without interfering in fund management, pension trustees may also undertake targeted verification exercises on selected portfolio companies to ensure investment performance aligns with reported outcomes.

Portfolio diversification reduces risk

The discussions also challenged the misconception that every investment within a private equity portfolio must be treated separately. Industry participants explained that private capital investing is designed around portfolio-level performance, where successful investments are expected to offset losses from underperforming businesses while delivering attractive long-term returns.

Limited Partnership Agreements (LPAs) also incorporate diversification requirements by setting limits on sector and geographic exposure, reducing concentration risk.

Fund managers further protect investor capital by actively responding to macroeconomic conditions. During periods of severe currency depreciation or heightened market uncertainty, capital deployment may be slowed temporarily to preserve purchasing power and maintain investment discipline.

Governance remains central

Another key discussion focused on governance and the importance of experienced management teams. Institutional investors place significant emphasis on assessing the capabilities, consistency, and alignment of fund managers before committing capital. The quality of the investment team is widely regarded as one of the strongest indicators of long-term fund performance.

Emerging fund managers are also expected to complete extensive due diligence assessments covering governance, operational processes, and investment strategy and risk management. While demanding, these exercises help strengthen institutional capacity and improve investor confidence.

GVCA has also been advocating for and planning towards building the development of the talent pipeline, working together with partners like Nova Business School Africa to offer executive-level training and support to financial industry professionals, especially females, helping them understand the nature of the subsector as well as the career pathways available.

Participants noted that although boards retain ultimate decision-making authority under Ghanaian law, advisory committees play an important oversight role by addressing conflicts of interest, reviewing reserved matters, and ensuring investment decisions follow established governance frameworks.

The session also examined the concept of warehousing capital, an approach that enables selected first-time fund managers to access a portion of committed capital before reaching a final fund close. This allows managers to build an investment pipeline, demonstrate execution capability and strengthen their fundraising prospects.

Investment options for pension funds

The roundtable highlighted two principal routes through which pension funds and insurance companies can gain exposure to private capital.

Direct investment into individual private equity or venture capital funds offers closer engagement with fund managers, relatively lower management fees, and quicker reporting. However, this approach requires significant in-house expertise to conduct due diligence and monitor investments while exposing investors to greater concentration risk.

Alternatively, investors may allocate capital through a Fund of Funds structure, like Ci-Gaba, which is led by private equity expert Hamidiya Ismaila, and provides immediate diversification across multiple private capital funds and access to experienced fund managers.

While this model broadens portfolio exposure and can simplify regulatory compliance, it also introduces an additional layer of management fees, longer capital deployment periods, and more complex reporting requirements.

As institutional investors continue exploring alternative asset classes, stakeholders believe strengthening governance, improving market transparency, and enhancing investor education will be critical to mobilising long-term domestic capital for Ghana's private sector and accelerating the growth of innovative SMEs.