South Africa’s Public Investment Corporation Focusing On Private Equity

South Africa’s Public Investment Corporation Focusing On Private Equity

From BusinessDayLive. Story by Linda Ensor.

Assets under management by South Africa’s Public Investment Corporation grew 12.9 percent in the 2014-2015 financial year to 1.8-trillion rand ($128 billion US), making it one of the “most influential” organisations in the South African economy, the annual report tabled in Parliament last week noted.

The corporation, which invests funds on behalf of the Government Employees Pension Fund, the Unemployment Insurance Fund and the Compensation Commissioner Fund, among others, achieved a real rate of return on its portfolios of 13.72 percent.

Although the largest slice of assets under management are listed investments, the corporation is increasingly focusing its investment on unlisted developmental investments and private equity, CEO Daniel Matjila said. During the financial year ending in March the corporation approved 11.3 billion rand ($803 million) for developmental investments, excluding its investment in listed infrastructure bonds and 1.8 billion rand ($128 million) for private equity.

“Our focus on developmental investments and private equity is based on evidence that these assets classes have a direct impact on economic growth through job facilitation, transformation and improvement of ordinary people’s lives,” he said. The focus was to drive transformation in untransformed sectors and support emerging black industrialists.

Last year 26 unlisted transactions worth more than 13.1 billion rand ($931 million) were approved, three of them in the rest of Africa. PIC committed more than 1.3 billion rand ($92.4 million) to support emerging black fund managers in South Africa and Africa.

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Of the total assets under management, 48.68 percent was invested in local equities, 34.31 percent in local bonds, 4.46 percent in cash and money market assets, 5.19 percent in property, 3.91 percent in offshore equities, 1.4 percent in offshore bonds, 0.65 percent in African equities outside of South Africa and 1.4 percent in the Isibaya fund.

The corporation invested 11.9 billion rand ($846 million) on the continent last year. It entered into strategic partnerships with the African Development Bank and Russia’s Gazprombank, which is active in the oil and gas infrastructure sector.

“We will be accelerating investments in the rest of the African continent and other frontier markets as well as in BRICS (countries),” Matjila said. The report said investments in African private equity last year exceeded expectations due to the good pipeline of deals.

Regarding its investment in the Victoria and Alfred Waterfront in Cape Town, the report said the construction of the final phase of the 1.5 billion rand ($106 million) silo was underway. This involves the conversion of the old grain silo into an art museum.

The corporation made a 330 million rand ($23 million) profit in the 2014-2015 year.

Read more at BusinessDayLive.