The Unemployment Insurance Fund (UIF), which provides short-term financial support to workers who lose their jobs or cannot work, has partnered with the Industrial Development Corporation (IDC) to establish a R5bn fund to provide finance to firms that support job creation and retention.
The UIF II Fund will be co-managed by state-owned asset manager the Public Investment Corporation (PIC). The fund, which provides loans to qualifying entities, has so far approved R3.8bn in finance to qualifying firms in various industries, including agriculture, transport, industrial infrastructure, pharmaceuticals and mining.
So far, the UIF and the PIC say, the fund has provided finance for six investments of R311m in firms with 26% youth ownership that are expected to create 560 and preserve 68 jobs, 24 investments of R1.032bn for companies owned and managed by women (expected to create 4,602 and preserve 7,293 jobs) and funding of R1.712bn to 36 start-ups that are expected to create 6,856 new jobs.
The UIF II Fund has also provided funding of R2.452bn to 50 firms in the IDC’s black industrialist programme that are expected to generate 9,428 new jobs and preserve 17,833.
The establishment of the fund comes as the UIF’s assets under management (AUM) for the financial year to end-March grew 13% to R135bn. The entity is recovering from the emergency sell-off in nominal bonds to finance the UIF Covid-19 Temporary Employment Relief Scheme (Ters) of R64bn.
The UIF and Compensation Fund have both previously halted ramping up new investments in unlisted entities citing poor performance, including the liquidation of several companies.
“Of the 12 unlisted investee companies in distress, three are in liquidation, whilst another three have been placed in business rescue. A further two are under legal dispute and the remaining four are being restructured and turned around,” says investment committee chair Ogalaletseng Gaarekwe.
“Job retention and job preservation are priorities for the UIF and the PIC when investee companies become distressed, and the Tova team has done commendable work to minimise job losses and preserve value in some of the distressed assets.”
The UIF is the PIC’s second-largest client, with a portfolio of assets 5.14% of total AUM.
“The UIF portfolio has 92.05% invested in domestic assets and the rest in foreign equities. Listed investments constitute 89.9% of the portfolio, with Socially Responsible Investments (SRI) making up 10.13%. The UIF’s higher exposure to domestic bonds and listed equities positively contributed to robust growth in the fund’s investments,” the UIF and PIC said in a joint statement on Monday.
The PIC, with total assets under management of about R2.3-trillion, acts as the asset manager for the UIF and Compensation Fund. The PIC’s main client is the Government Employees Pension Fund.
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