The Public Investment Corporation (PIC) has bemoaned the impact of the COVID-19 pandemic as its Assets under Management (AuM) shrunk by 10% in the 2019/20 financial year.
Presenting its integrated annual report before Parliament this week, the PIC said the decline could be attributable to, amongst others, the impact of the novel Coronavirus, particularly during the last months of the 2019/2020 financial year.
At the close of the financial year on 31 March 2020, the AuM value was R1.907 trillion, compared to R2.131 trillion at the close of the previous financial year.
This represents a decline of 10.84%. Local listed equities and property portfolios were most affected, recording losses of approximately 19% and 24%, respectively.
“It is with painful realism that the PIC has to present this Integrated Annual Report. The PIC was well on track to achieve its investment objective of growing clients’ assets before the Coronavirus caused untold damage to financial markets,” said Board Chair Dr Reuel Khoza.
He said notwithstanding the impact of the COVID-19 pandemic, the PIC remains committed to delivering on the investment mandates of its clients. In addition, the PIC is already seeing signs of recovery in the AuM.
“Most importantly, the organisation remains financially sustainable,“ said Khoza on Thursday.
At a broad level, he said, the PIC’s portfolio comprises domestic listed equities, unlisted investments, offshore and Rest-of-Africa investments.
The domestic listed equities portfolio is made up of in-house managed listed equities (32.82%), externally managed listed equities (8.28%), bonds (34.86%), cash and money markets (6.96) and listed properties (1.38).
The unlisted investment portfolio is made up of private equity (0.95%), impact investing (3.02%) and unlisted properties (2.69%). The offshore and Rest-of-Africa investment portfolios are made up of global listed equities (5.63%), global listed bonds (1.97%), Africa listed investments (1.12%) and Africa unlisted investments (0.33%).
PIC chief executive officer (CEO) Abel Sithole said the corporation remains committed to and focused on its long-term investment strategy.
“We are confident that this investment approach will continue to yield positive returns for our clients. The investment strategy focuses on building a diversified portfolio strong enough to withstand and absorb unanticipated market shocks. In addition to creating financial returns, our investments must also create jobs and expand the provision of infrastructure and social services, ” said Sithole.
One of the factors that differentiate the PIC from other asset managers is its focus on investing for financial returns and development.
Social returns
During the financial year under review, the PIC continued to invest to support development focusing on job creation, contributing to transformation and advancing economic empowerment in amongst others:
- To date, the PIC has committed R1.2 billion to education infrastructure programmes.
- The PIC invested R15 billion in renewable energy initiatives via the Renewable Energy Independent Power Producer Programme (REIPPP).
- The PIC’s supports the sustainable development goals (SDG) of the United Nations. The focus of SDG 11 is to make cities and human settlements inclusive, safe, resilient and sustainable.
During the year under review, the PIC was a subject of investigation into impropriety by the Commission of Inquiry led by retired Judge Lex Mpati. The findings of the Commission pointed to lapses in governance at the PIC.
The Board, since its appointment in July 2019, has been hard at work to restore governance and ethical behaviour at all levels of the institution. The Board will continue to strengthen governance, restore confidence in the organisation and drive ethical behaviour.
Developments post-financial year-end
Following the close of the financial year, the PIC appointed Sithole as CEO. A new Chief Operating Officer (COO) and Chief Risk Officer (CRO) have already been appointed.
The PIC has also set up an Ethics Office to inculcate an ethical culture. – SAnews.gov.za
