Public Investment Corporation reports growth of 8.9%
The Public Investment Corporation (PIC) says it recorded growth of 8.9% in its assets under management (AuM), to R2.548 trillion.
The PIC, which manages funds on behalf of public sector entities, tabled its integrated annual report for the 2021/22 financial year on Wednesday (28 September)
“The PIC’s growth and performance is grounded in a disciplined investment approach focused on delivering positive, risk-adjusted returns to client portfolios over their desired time horizon,” said chief executive officer, Abel Sithole.
The growth has been achieved despite external challenges in the operating environment, with listed equities, which is PIC’s major asset class by percentage, delivering positive returns and contributing R1.227 billion to the entire portfolio, he said.
The PIC’s portfolio is made up of the following assets: Listed Investments (86,78%), comprising listed equities, bonds, cash and money markets and listed properties; Unlisted Investments (4,57%), which is made up of private equity, impact investing and unlisted properties; and Offshore and Rest of Africa Investments (8,69%), made up of global listed equities, global listed bonds, Africa-listed investments and Africa-unlisted investments.
Unlisted investments
The portfolio endured the effects of Covid-19, and a relatively tough economic environment, more intensely in the year under review, than in the previous financial year, and this is reflected in the decreased portfolio value, it said.
Investee companies were supported throughout the pandemic, with payment holidays, extension of loan tenures and waivers of covenant breaches.
Limited capital injections were offered to some companies. These interventions are made on merit and on a case-by-case basis.
The portfolio value decreased by 7.79% to R75.15 billion due to impairments raised during the financial year. Disbursements for the year decreased by 60.52% to R2.25 billion compared to the previous year, said the PIC.
The group said it made fewer unlisted investments during the year under review compared to the previous financial year, because the unlisted investment mandate with the Government Employees Pension Fund (GEPF) was under review.
The revised mandate was signed at the end of the financial year, with the GEPF committing R25 billion. The committed amount will be deployed over the next five years in both South Africa and the rest of Africa, it said.
The target of developmental investments for South Africa is between R300 million and R500 million per entity although attractive investments starting at R100 million will be considered per entity.
The Rest of Africa developmental investment portfolio shall mainly comprise of investments between USD20 million and USD40 million, said the PIC.
Unlisted properties
The performance of the property market is correlated to domestic GDP growth. During the year under review, the macroeconomic environment was already subdued before global the Covid-19 pandemic, it said.
The PIC’s property portfolio is now valued at R52.62 billion. It is made up of directly- and indirectly held property investments in South Africa and rest-of Africa, with some notable investments in such companies as Pareto, the V&A Waterfront and Gateway Real Estate Africa.
Given its developmental mandate, the PIC said it has invested alongside other property developers to roll out 10,000 beds for student accommodation. At 31 March 2022, the portfolio had 1,579 student accommodation beds under its management.
The PIC said it continued to implement short-to-medium term property asset management interventions, which include portfolio optimization; disposal of strategically misaligned property assets; repositioning of existing assets through redevelopment and refurbishment where possible, and the pursuit of alternative and emerging sectors.
It also targeted acquisitions to focus on high-quality income streams that can be sustained, while it increased strategic investment into real estate funds across the continent, “to ensure adequate market exposure and best-in-class partnerships”, and creat capacity for unserviced nodes and new market entrants.
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