The recovery in global and domestic markets has lifted the value of the assets under management of the Public Investment Corporation (PIC) back to its pre-pandemic levels, above the R2-trillion mark.
Falling equities markets and the sluggish growth of the domestic economy in the first quarter of 2020, when concerns about the spread of the coronavirus were intensifying, saw the fund manager’s assets plunge 10.5% year on year to R1.9-trillion in 2020. By March 2021 assets had grown by R440bn to R2.33-trillion.
“Notwithstanding formidable and adverse conditions it encountered during the year under review, the PIC showed remarkable resilience and versatility in its investment performance. It demonstrated its adeptness and delivered solid returns on the investments of its clients, their members, and their beneficiaries,” CEO Abel Sithole said.
The PIC’s annual report was tabled in parliament on Wednesday. The growth in assets came on the back of a 51% jump in the JSE’s all share index in the year to March 2021. That was a recovery from a 24% slump in the first three months of 2020 as economies started to close across the world as the Covid-19 pandemic spread.
The PIC is Africa’s largest fund manager overseeing assets including those of the Unemployment Insurance Fund (UIF) and the Government Employees Pension Fund (GEPF). The portfolio of the GEPF, the PIC’s biggest client, grew by 28% to more than R2.08-trillion, from R1.633-trillion the previous financial year.
The portfolio of the UIF, the PIC’s second-largest client, declined by 24% from R151bn to R116bn. The decline was due to withdrawals to make contributions towards payments required for the Covid-19 Temporary Employee/Employer Relief Scheme (Ters), which was established to provide relief to workers and employers affected by the pandemic. The fund has had to deal with the additional strain of administering Ters payouts as the country reels from a spiralling jobs crisis.
The PIC says its unlisted investments and unlisted properties saw additional impairments for the 2020/2021 period and value reductions, which have been exacerbated by the effects of the pandemic. The 2021 impairments, however, have not been published because the fund has not yet been given approval by its clients to do so, in line with the PIC Amendment Act.
The PIC has attributed the growing list of impairments to “external factors related to the adverse domestic economic environment”.
As part of the renewal of the PIC following the findings of the Mpati inquiry into its governance failures by its previous management, a law passed in February requires that the fund manager table a report reflecting all investments, which must be annually submitted to the minister of finance for tabling in parliament with the annual report of the Treasury.
“The PIC will, in consultation with its clients, co-ordinate the submission of the listed and unlisted investments to National Treasury, as required by the PIC Amendment Act, for National Treasury to table the list of all assets once approved by clients,” it said.
The interim board, led by businesses stalwart Reuel Khoza, has begun implementing the recommendations of the Mpati commission, including separating the roles of the CEO and the chief investment officer, which were previously held by Dan Matjila. The board ensured the appointment of a chief technology officer and introduced the position of head of ethics to inculcate ethical behaviour within the PIC, Khoza said.
Sithole was appointed as the fund’s permanent CEO in 2020, after holding the CEO position at the GEPF.
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