Matjila hits out at media for singling out the PIC's questionable deals

Cape Town – The Public Investment Corporation (PIC) is a “lean and mean” organisation which is delivering on client mandates, a committee has heard.

The PIC briefed the standing committee on finance (SCOF) on the process and rationale behind its investment decisions to ease concerns about questionable deals by the asset manager. The PIC manages investments for the Government Employee Pension Fund, which is 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 deals by the PIC which 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 and has grown by billions.

“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 also explained that as the CEO he does not singlehandedly approve billions worth of investments, instead applications for investments are received by the PIC which then goes through a rigorous process of due diligence. A committee has to approve investments.

Ayo Technology

Among the questionable investments include a R4.3bn investment in Ayo Technology Solutions in 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.

• READ: PIC executives purged as more deals questioned

Other members of PIC management also provided reasoning behind some of the PIC’s investment decisions.

According to the presentation to SCOF, the PIC saw the potential of the Ayo investment as there is potential for it to 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 to be significantly high. The PIC also believes that Ayo has an experienced management team in place which will be an advantage going forward and has the highest BBBEE credentials in the sector.

The PIC 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. The PIC also calrified its position on investments in MST.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER