PIC looks beyond borders

2011-11-26 08:05

Elias Masilela, chief executive of the Public Investment Corporation (PIC), intends to make the country’s largest asset manager more powerful by improving its efficiency and extending its investment tentacles beyond the continent.

For the first time the corporation, which celebrated its centenary on Friday, will be allowed to invest about 10% of its assets outside of its borders. Five percent will be invested outside of South Africa and a further 5% outside the continent.

This is intended to help diversify its R1 trillion portfolio and reduce its risk exposure to the continent.

Already the state-owned asset manager has a licence to invest in Africa, where there are promising investment opportunities in the ­resources and infrastructure ­sectors.

However, of immediate concern to Masilela is making the corporation a well-oiled machine.

Masilela, who took over the reins in February, says: “We want to be the best asset manager in SA, not just the biggest asset manager ... We will improve our ­efficiencies.”

Under his predecessor, Brian Molefe, the corporation was feared in the local corporate circles for its abrasive shareholder activism.

Molefe would often quarrel with the boards of some of the country’s largest companies, where PIC is a substantial investor.

The occasional disagreements ranged from issues of excessive executive bonuses to failure to appoint black people to senior management positions.

Masilela says the harsh approach is not going to change under his ­tutelage. Molefe’s abrasive posture led to some investors and companies complaining that the corporation is a bully that throws around its massive financial weight.

In fact, there is a view in the investor community that big law firms shy away from taking on the PIC.

But Masilela rejects this view. He argues that they act in the best ­interest of their clients and merely follow their mandates.

The PIC’s top five clients are the Government Employees Pension Fund, Unemployment Insurance Fund, the Associated Institutions Pension Fund, the Compensation Commissioner’s Pension Fund and the Compensation Commissioner’s Fund.

In the wake of the global economic crisis that decimated the jobs market, Masilela says the PIC will use its financial muscle to support the development of small- and ­medium-sized enterprises which can be a catalyst for creating jobs.

The asset manager will also ­invest in the development of social and economic infrastructure and in renewable energy such as solar and wind electricity generation.

Masilela is happy with the ­performance of PIC’s investment portfolio which boasts JSE-listed giants such as petrochemicals group Sasol and industrial group Barloworld.

The corporation is one of the largest investors on the JSE, with its ­investments accounting for about 9% of the local bourse’s market capitalisation.

The total value of its JSE portfolio is worth R495 billion, representing almost 48% of net ­assets under management of the state-owned asset manager.

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