The Public Investment Corporation (PIC), the largest asset manager in Africa, grew its total assets under management by 2% to R2.599-trillion in the year to end-March in what was a difficult economic climate.
PIC chief investment officer Kabelo Rikhotso noted in the annual report tabled in parliament that the growth in assets under management was driven mainly by growth in the value of listed bonds, which offset the decline in the value of domestic equities.
The asset manager’s inflation-linked bonds and conventional bonds portfolios outperformed their benchmarks by 0.7% and 0.3%, respectively. The cash component outperformed the market by 0.3%. The listed property component of the portfolio performed in line with the SA property index benchmark.
Listed equities, the PIC’s major asset class, grew 7.9% over the 12 months, outperforming benchmark returns by 1%.
PIC CEO Abel Sithole said the results were produced in the context of weaker economic conditions and higher levels of risk aversion among major investors. Global inflation had been rising to the highest levels seen in a generation, with higher interest rates as a result.
“Slower global growth, disruptions to oil and food supply chains due to the conflict in Ukraine, elevated levels of daily electricity supply disruptions and growing unemployment in the domestic economy were other significant macroeconomic constraints.”
Global growth is likely to be constrained in 2023, with the IMF expecting global growth to slow from 3.4% in 2022 to 2.8% in 2023.
“Increased levels of power outages in SA will continue to restrain the local economy for the rest of 2023. This will affect productivity among investee companies in both our listed and unlisted portfolios and will substantially increase their operating costs and reduce our investment performance,” Sithole said.
At year end, 36.71% of the PIC’s assets under management were in listed equities managed in-house, 9.75% in listed equities externally managed, 32.65% in bonds, 4.85% in cash and markets and 1.57% in listed properties.
Of its unlisted investments, 0.56% of assets under management were in private equity, 1.7% in impact investing and 2.1% in unlisted investments. Of its offshore investments, 6.54% was in global listed equities, 1.46% in global listed bonds, 1.5% in African listed investments and 0.59% in African unlisted investments.
The PIC invests funds on behalf of the Government Employees Pension Fund (GEPF) and the Unemployment Insurance Fund (UIF), among others. The GEPF portfolio, which makes up 88.61% of total assets under management, grew by 1.1% to R2.3-trillion. The UIF portfolio, comprising 5.14% of total assets under management, grew by 13% to R135bn and the Compensation Commissioner, accounting for 2.09% of total assets under management, increased by 4.3% to R54.4bn.
There are 15 smaller clients that make up the balance of the PIC’s total portfolio, and their assets grew by 7% to R61bn.
Sithole remarked on the growth of the PIC’s externally managed funds programme for black asset managers, which since 2009 has seen an increase in the participation of black asset managers in the savings, investments and asset management industries. In 2009, external black-owned firms managed 17% of the R65bn in externalised assets allocated by the PIC. By the end of 2022/23, these allocations had grown substantially to R154bn.
Domestic firms in the programme have more than 51% black ownership and 30% black management control, and are responsible for 64% of assets allocated to domestic firms. Fees paid for portfolio management services on domestic assets totalled R837m, with R516m (62%) going to BEE firms.
The PIC’s unlisted division, housed in the R99bn Isibaya Fund, invested more than R11.5bn in the domestic economy in the 2022/23 financial year in sectors such as renewable energy, financial services, agriculture, housing and manufacturing.
The PIC funded or enabled funding for all initiatives under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), representing R51.7bn of the R229bn invested in REIPPPP projects.
The PIC is the largest holder of bonds in Eskom (R85.5bn), Transnet (R18.6bn) and Sanral (R13bn).
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.