Futuregrowth lifted its funding suspension on a third state-owned entity (SOE) on Monday, the Development Bank of Southern Africa (DBSA) revealed in a statement.<\/p>\n
Futuregrowth, which has about R170 billion in assets, took an unprecedented decision on August 31 to halt negotiations on more than R1.8 billion of debt finance to certain SOEs.<\/p>\n
It halted loans to Eskom, Transnet, the SA National Roads Agency (Sanral), Landbank, the Industrial Development Corporation (IDC) and the DBSA.<\/p>\n
Before Monday, it had lifted the freeze of lending to the Landbank and the IDC.<\/p>\n
As with the other two entities, the DBSA said its lending freeze was lifted subject to \u201cagreed improvements and additional reporting\u201d.<\/p>\n
\u201cThis announcement follows the conclusion of a rigorous due diligence process, during which Futuregrowth reviewed the DBSA\u2019s governance structures, processes and independence,\u201d the DBSA said.<\/p>\n
Futuregrowth said in an opinion piece that events during 2016 in the SOE sector lead it to suspending new funding to six SOEs on governance concerns.<\/p>\n
\u201cFollowing this public stance, we committed to embarking on an in-depth review of the corporate governance practices of these entities with a view to better understanding the governance mechanisms underpinning them, the risks and opportunities, and to facilitate an engagement process with the management of the SOEs,\u201d Futuregrowth said.<\/p>\n
\u201cOur vision was to create a long-term foundation for better governance, better transparency and disclosure and long-term sustainability of our investments.<\/p>\n
\u201cOverall, the engagement with the SOEs that have chosen to engage with us, has been positive and constructive.\u201d<\/p>\n
DBSA CEO Patrick Dlamini said that following the suspension, the bank engaged with Futuregrowth to understand and address their concerns. \u201cWe are pleased that our relationship has been restored and strengthened,\u201d he said.<\/p>\n
\u201cThe due diligence process confirmed that the DBSA has an appropriately constituted board with a suitable balance of skills and experience; a positive and constructive relationship between the board and the executive committee; and evidenced application of policies and processes.<\/p>\n
\u201cWe have committed to increasing reporting on Board and investment activities as well as implementing additional governance structures that Futuregrowth has recommended. We believe that these enhancements can only benefit and strengthen our corporate governance structures,\u201d said Dlamini.<\/p>\n
A Futuregrowth spokesperson said on Monday it would release a statement shortly.<\/p>\n