State-owned entities are stable: Minister Brown

Public Enterprises Minister Lynne Brown has assured investors that South Africa’s State-owned entities (SOEs) are stable.

“I want to assure all lenders and investors that Eskom and Transnet are credible and reliable borrowers with strong credit fundamentals, as evidenced by their respective credit profiles.

“Their performances over the past financial year confirm their strong governance structures, including the stable Boards of Directors and Executive Committees,” the Minister said on Thursday.

Minister Brown reassured markets after Futuregrowth Asset Managers, the nation’s biggest specialist fixed income manager, said it would not lend to Eskom as it had stopped lending to SOEs amid governance concerns.

Futuregrowth announced that it had suspended negotiations on over R1.8 billion of debt finance to three different SOEs.

Last month, Eskom completed a domestic roadshow to meet with local asset managers, including Futuregrowth Asset Managers. On Thursday, Eskom said the concerns raised by Futuregrowth were not raised at the time of the roadshow.

Eskom has, however, indicated that it will continue to engage with Futuregrowth and the broader investor community to understand their concerns regarding current and future investments into Eskom.

As the shareholder representative on behalf of government, Minister Brown said they have recently concluded Eskom and Transnet’s Annual General Meetings, where it was noted that the boards have successfully fulfilled their fiduciary duties. Both companies have obtained unqualified audit reports.

“This is a critical indicator for any international or national investor to invest in the future of both companies and in South Africa,” said Minister Brown.

She urged current and potential investors to directly engage with her and the SOEs about any matter of concern regarding their investments.

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State-owned entities are stable: Minister Brown