The man who has R1.6 trillion to ‘play with’Comment on this story
AS EDITOR of Business Report, I get the opportunity to engage with some of the leading personalities in business and in government – and that’s what fascinates me: leadership. Whatever sphere of business one looks at, there is always someone responsible for something: big and small.
As chief investment officer of the Public Investment Corporation (PIC) Daniel Matjila has a big responsibility – and that is to decide how, why, where and when the PIC – which manages R1.6 trillion on behalf of public servants – invests its cash. It is the largest and most successful investment manager in Africa. Most investors and businesses literally run into the PIC at each and every turn as the money manager throws its weight around, looking for the best return for its clients.
To understand the PIC is one thing, but to understand the person behind its key decisions is another. Matjila, 52, is a well-respected finance, investment and risk management specialist, strategist and academic. He joined the corporation in 2003 as a risk manager before being promoted to chief investment officer and non-executive director in 2005.
Matjila started his career as a senior mathematics lecturer at the University of the North and was in academia for more than nine years. He holds a PhD (Wits), MSc (Rhodes), BSc Hons (Fort Hare), BSc (Fort Hare), among other qualifications.
What follows are excerpts of the conversation I had with him last week, in which he shares some of his thinking about the PIC’s investment strategy. I also asked him about his background.
How have you managed to grow the PIC’s asset base at a time when the global/ domestic economy has not been stellar?
Diversification has been helpful under these conditions. The search for yield by global investors has cushioned our market as it has offered better yields in relative terms. This reflected in the JSE all share hitting the 52 000 level.
What do you think prepared you in your career thus far to be chief investment officer?
My educational background of science and mathematics has made it possible for me to understand a lot faster how the financial markets work, in particular. Furthermore, I gained valuable experience when I worked for good companies before joining the PIC. I started my career at Anglo American where I cut my teeth in the investment department and later joined Stanlib, where I gained much exposure and training before I joined the PIC.
Would you be interested in the chief executive role at the PIC? If so, why? It is currently vacant.
It is human nature to aspire to progress to the next level in order to deal with new challenges. That’s what makes us grow as individuals and as society. That said, I will be among those who will be applying for the position because I believe I have the necessary expertise and experience and, most importantly, the vision of where the PIC should be in 2020, and beyond.
How much does politics play in the PIC’s investment decisions? If at all. What informs investment decisions?
Investment decisions are informed by mandate fit, an assessment of potential returns, understanding of the risk and ability to manage such and the environmental, social and governance considerations. Political risk is considered as part of risk management. While politics cannot be ignored, it should be noted that its not more important than returns and risk.
What is your outlook for investment opportunities in Africa for the PIC?
Positive. There are a lot of investment opportunities. The returns are high but so are the risks. Lack of adequate corporate governance systems remain a challenge in Africa.
How were you raised? Provide us with some background to your upbringing?
My childhood was tough. I grew up in a family of six siblings – brothers only, living with our parents in a four-roomed matchbox house in Ga-rankuwa. I’ve always been happy and enjoyed life despite these challenges. The values that my parents instilled in us are priceless and they have seen me through life to date. My parents have taught me to respect others and to show appreciation for any good thing anyone does for me. This is a value I am teaching my children.
What was your schooling?
I completed my high school education in Ga-rankuwa in 1980. After matric I worked as an apprentice and saved most of my salary for my tertiary education. I opened my first bank account with African Bank Limited in 1981. I then enrolled for a pre-engineering course at Fort Hare University in 1992 which I a later converted into a BSc. I passed my degree with distinction, followed with a BSc Honours, which I also passed with distinction. I enrolled in an MSc at Rhodes University in 1986 and followed that with a PhD at Wits University, which I completed in 1994 as a part-time student when I was lecturing at the University of the North.
How do you think South Africa can build a strong pipeline of leaders such as yourself?
It all starts at home. My parents taught me to respect other human beings without discriminating anyone. They have given me a sense of purpose and, most importantly, why I live. Thus ensuring that my actions make a positive contribution to the environment that I’m living in. I believe we are on Earth to continually change our environment for the better, for the benefit of the next generations, and generations to come hereafter.
What is your leadership philosophy?
Adaptive but, to a large extent, collaborative. I adjust depending on the circumstances. Sometimes I lead from the front, sometime I coach and let someone with better knowledge of the subject take the lead.
Which two people are an inspiration to you?
Gervais Koffi Djondo, one of the founders of Ecobank, and OR (Oliver Reginald) Tambo, the science and mathematics teacher and liberator.
What are you reading, and why?
There is no specific book that I’m reading. I spend a lot of time on financial market reports and data analysis to ensure that our portfolio is optimally positioned.
How do you unwind?
I try to spend any free moment with my family and go to attend church on Sundays when I’m not travelling.
What do you think will best help South Africa improve the quality of maths and science teaching?
Upskilling of maths and science teachers. There has to be a programme designed to ensure that all science teachers have a minimum body of knowledge to be able to deliver the subject matter. In the private sector, rare and scarce skills are rewarded differently. Perhaps this principle should also apply to other sectors including education, to ensure that the best talent (maths and science teachers) is developed and retained within the profession.
How much teaching do you still do – even on an ad-hoc basis?
Not much. I don’t have much spare time.
How would you describe your tenure at the PIC so far?
Very fulfilling in many ways. We had R300 billion of assets under management (AuM) when I joined the PIC in 2003 and we are now on R1.6 trillion. It can only get better from here. The PIC became a corporation in 2005, which was a big milestone in its history. I have grown both mentally and spiritually, I guess, in line with the growth in AuM.
What does a chief investment officer with R1.6 trillion of assets “to play” with do?
A lot of thinking goes into strategic positioning of the portfolio to generate better returns than the benchmarks prescribed by the clients in the mandates. We recognise that our job is to take risk in pursuit of returns. Understanding the risk the portfolio is exposed to and devising strategies to manage these risks is what keeps us busy. We, therefore, strive to “play” within appropriate parameters to ensure that the portfolio grows in such a way that the clients will be able to meet the financial obligations to its members when they become due. Our investment philosophy is anchored on valuation, risk management, cost containment, robust research, environmental, social and governance consideration, and a long-term investment horizon. This philosophy has instilled a lot of discipline in our investment process. It has yielded more than 15 percent compound annual growth rate in AuM over the 10 years.
What role do you foresee for the PIC in driving the National Development Plan (NDP) agenda?
To us, the NDP is an investment strategy. Our AuM growth depends on economic growth. We have thus adjusted our investment approach to invest in sectors and industries that are catalysts for economic growth. AuM grows at roughly five times gross domestic product growth. Therefore, if we can grow the economy at about 4 percent, or better, the AuM can grow by 20 percent. This can be achieved by investing in the economic sectors that drive economic growth as identified in the NDP, thus creating a virtuous cycle.
There are a lot of JSE-listed companies that operate in key sectors such as infrastructure (social and economic), energy, oil and gas, agriculture, financial services and small and medium enterprises, etc. We will for strategic partnership to invest alongside these companies at project level to create jobs and grow the economy. We will leverage on their technical expertise to successfully drive performance and therefore returns.
For example, we are the biggest investor in Growthpoint Properties, a JSE-listed property company. Together in 50/50 partnership we were able to buy back the V&A Waterfront. This joint venture is very successful and has provided us with a framework to roll out our NDP strategy.
Anything else you wish to elaborate on, please feel free to add or highlight.
We are concluding a sale of almost 10 percent of our shareholding to a BEE (black economic empowerment) consortium to enhance the BEE shareholding in Growthpoint Properties. We are very proud of this. We are looking for similar opportunities within the developmental investment space where we can invest alongside companies that have appropriate investment opportunities and the technical expertise to manage key projects. We will give preference to companies that are empowered or are prepared to be empowered.
We do all this and more to ensure that South Africa’s pensioners retire comfortably.
Follow Ellis Mnyandu on Twitter: @Ellis_Mnyandu