UIF billions for PIC ‘cronies’

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Politically connected investors, who scored R1.7 billion from the Public Investment Corporation (PIC) last year, have just received another bonanza: a R1.8 billion deal, this time financed by the Unemployment Insurance Fund (UIF).

In January, City Press exposed details of a R1.7 billion deal the PIC funded that saw little-known investment company Kilimanjaro Capital acquiring a large stake in Tosaco, the BEE partner of French petroleum company Total.

The deal was controversial because it included a lucrative stake for Sizwe Shezi, a trustee of two of President Jacob Zuma’s trusts, and led to United Democratic Movement leader Bantu Holomisa laying a complaint with the Public Protector.

Now it has emerged that the PIC agreed to fund not one, but two deals for mostly the same group of people, all within the space of a few weeks.

After receiving questions from City Press on Thursday, the PIC released a statement confirming it had agreed to provide almost R1.8 billion in funding to little-known company Kefolile Health Investments.

Most of the money will be used to buy a significant stake in Ascendis, a JSE-listed pharmaceutical company.

City Press has established that in June last year, as the PIC was putting finishing touches on the Tosaco deal, it also agreed to fund a R1.25 billion investment in Ascendis via a company called Shkhara Health.

Although the PIC will not say why, the deal fell through. But it was revived, with an almost identical investment structure, this year under the name Kefolile.

Asked why the Shkhara deal did not go ahead, PIC spokesperson Sekgoela Sekgoela said: “The PIC funds deals which meet investment criteria, and any deal that is not in line with these criteria would not be funded.”

Although Ascendis described Kefolile in the statement as the type of “longer-term investors” they are after, records show that Kefolile is a newly registered shelf company that only acquired its directors a month ago.

While neither Kefolile nor Shkhara have long track records, both companies come with names familiar to the PIC – Lawrence Mulaudzi, Kinesh Pather and Obayd Joseph – all of whom also received significant stakes in last year’s R1.7 billion Tosaco deal.

The PIC will not say what Kefolile brings to the party to justify being beneficiaries of such largesse, saying only that it comprised “a team of experienced professionals, with knowledge and expertise in the health sector”.

Mulaudzi is the husband of former National Consumer Commissioner Mamodupi Mohlala, while Pather is managing director of the Bataung Group, a politically connected investment company that counted former president Thabo Mbeki’s adviser, Titus Mafolo, and Deputy President Cyril Ramaphosa’s spokesperson, Ronnie Mamoepa, as shareholders.

Both Mafolo and Mamoepa have indirect connections to the Tosaco deal. Mafolo’s wife, Wilhelmina, is a director of minority shareholder Velmafo, while a company registered to Mamoepa’s home address in Eldorgaine, in Centurion – called Manthasa Logistics – holds another small stake.

Although the PIC will not disclose Kefolile’s shareholders, it denies that Shezi, Mafolo and Mamoepa are involved in the company.

Asked why the PIC chose to hand two multibillion-rand deals to Mulaudzi, Pather and Joseph, Sekgoela said: “Investments are made on a case-by-case basis. Where a particular investment fits the client mandate, such an investment will be considered subject to internal investment approval processes.”

TWO WHITE MILLIONAIRES

Only a fraction of the R1.8 billion will be used to buy tradeable, JSE-listed shares, however.

In its statement, the PIC said R500 million would be spent on acquiring a 5.5% stake in Ascendis, R100 million would go to Ascendis Pharma-Med, and R400 million would be invested in a related company called Bounty Brands. The statement did not mention what the remaining R800 million would be spent on.

However, City Press has also established that a significant chunk of money from the Unemployment Insurance Fund – R650 million – is destined for Ascendis’ founders, Gary Shayne and Cris Dillon (via a company called Gane Holdings), to allow them to also buy more shares in Ascendis.

According to the last Ascendis annual report, Shayne’s personal stake in the company is worth roughly R1.4 billion, which a rising share price has since driven up to almost R2.7 billion. Dillon’s personal stake is worth roughly R482 million.

The debt will only start being repaid a year from now. The PIC has said the interest charged “is in line with commercial rates”.

Asked how funding two wealthy businessmen with unemployment insurance funds fell within the PIC’s mandate, it said: “The PIC has funded Kefolile Health Investments ... to assist these two companies’ growth and expansion strategy.”

Although the Government Employees’ Pension Fund and the Unemployment Insurance Fund are shareholders in Ascendis, the PIC chose not to use the money to increase their clients’ shareholding. Instead, the latter fund will receive a 30% stake in Kefolile.

The deal is similar to the Tosaco deal, where the PIC chose not to take up shares directly, but instead agreed to pour money into a consortium – including Kilimanjaro Capital and an obscure religious charity called The Global Fund for Christ – to allow them to buy and own the Tosaco shares.

The PIC says it agreed to fund Kefolile because “Ascendis entered into negotiations with Kefolile Health Investments and secured exclusivity”.

City Press sent detailed questions to Mulaudzi and Pather, and visited the offices of Kilimanjaro Capital, Mikumi Holdings and their most recently registered company, Zillionair Investments, to no avail.

Approached for comment, Ascendis said: “Kefolile comprises a number of highly experienced professionals with knowledge primarily in the health sector. The consortium ... indicated from the start that they would be seeking the backing of the PIC.”

Last week, deputy Public Protector Kevin Malunga confirmed that their investigation into the Tosaco deal was on hold for now.

Public Protector spokesperson Oupa Segalwe said:

“The Public Protector conducted a preliminary investigation into the matter ... [which] showed that there was not enough information to carry on with the case. The Public Protector could therefore not proceed with the matter. She awaits further information in order to investigate.”

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