PIC business model in the spotlight on first day of inquiry


The business model of the Public Investment Corporation was in the spotlight on Monday on the first sitting of a commission of inquiry into the affairs of the state-owned asset manager. 

The process, headed by former president of the Supreme Court of Appeal Lex Mpati, heard, among other things, how the PIC conducts due diligence, valuates investments and identifies conflicts of interest among members of its board.

The PIC has been mired in allegations of poor governance and impropriety in recent years, with questionable investments and allegations of bribery against some senior officials.

The allegations have threatened the reputation of Africa;s biggest asset manager, which oversees approximately R2trn on behalf of public servants. 

Roy Rajdhar, the corporation's executive head of impact investment, told the inquiry on Monday that the PIC had a post investment monitoring process in place, which is conducted internally to evaluate the viability of investments.

Assistant commissioner Emmanuel Lediga asked Rajdhar if the PIC had in the past pulled the plug on an investment after realising that it was not yielding desired returns.

Rajdhar responded that there had been instances where the PIC had to get involved in rescuing an entity it invested in, if a business hit difficult times. "We have had investments where we have had to be part of business rescue as well… it happens," he said.

Ayo factor

The funding criteria of the PIC came under scrutiny in 2018, with questions asked over its purchase of R4.3bn in shares in the initial public offering of Ayo Technology Solutions. The PIC bought shares at R43 a share, which have since fallen to R23 a share. 

The Government Employees Pension Fund, the PIC's biggest client, last month said it had written-off over R5bn in its investments in Steinhoff’s empowerment partner Lancaster 101 and Independent News and Media SA.

The PIC has also been linked to VBS Mutual Bank with one official said to have received a R5m bribe to facilitate payment of R350m to the collapsed mutual bank. The PIC was a shareholder in VBS, holding approximately 25% of the company’s equity.

The inquiry will sit until Wednesday.

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