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Cape Town – The Public Investment Corporation (PIC) is a “lean and mean” organisation which is delivering on client mandates, a Parliamentary committee heard on Tuesday.
The state investment manager briefed the standing committee on finance (SCOF) on the process and rationale behind its investment decisions to ease concerns about 'questionable' deals.
The PIC manages investments for the Government Employee Pension Fund, its largest client. The PIC has over R2trn worth of assets under its management, CEO Dan Matjila told the committee.
He spoke about the 'questionable' PIC investments which have surfaced in recent months in media reports.
“I must upfront say it is a little bit unfair of media to single out these few transactions, we have a portfolio with more than 300 securities.”
Matjila said the PIC was outperforming benchmarks.
“This tells you there are good assets which have generated returns that the media is not picking up or have chosen not to look at,” he said. “We are running a lean and mean organisation delivering on client mandates.”
Matjila said that as the CEO he does not and can not singlehandedly approve investments. Applications for investments are received by the PIC which then go through what he said was a rigorous process of due diligence. A committee has the final say over approvals.
Ayo Technology
Among questionable PIC investments was a R4.3bn investment in Ayo Technology Solutions as part of an initial public offering in December 2017. Business Day had reported that the investment decision did not come before the board.
Deon Botha, PIC’s head of corporate affairs, said that the investment committee would look into the matter to ensure that investment processes were followed, Bloomberg reported.
Other members of PIC management also provided reasoning behind some of the PIC’s investment decisions.
According to the presentation to committee, the PIC saw potential in the Ayo investment that the technology company could increase its market share in the software and services sector.
The largest player in the sector is EOH with a share of 6.6%. The market is worth R230bn and the margins in the sector are also viewed as high.
The PIC also believes that Ayo has an experienced management team in place which will be an advantage going forward. It also has the highest BBBEE credentials in the sector.
The corporation also defended its investment in Erin Energy, of which it acquired a 30% stake in February 2014. amaBhungane revealed that the oil investment was leading to losses. The PIC’s head of listed investments Fidelis Madavo clarified that it owns 29.58% of the stock, with unrealised losses of R167m.
As for its ties to VBS Mutual bank, the PIC first got involved in VBS in 1982 through the Venda GEPF. The investment was 34% equity of R10m to form part of the GEPF portfolio in 1996, with the intention to hold the investment and use it as a vehicle to deliver other products like housing and education loans.
In 2015 a significant investment for a revolving credit facility for the development for small and medium enterprises was made. VBS had serviced that until February 2018, when the bank went into curatorship. The PIC now has a 27% shareholding in VBS.
The PIC is in discussions with Sekunjalo to exit an investment in Independent News and Media which it made in 2013.
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