The Public Investment Corporation's chief executive, Dr Daniel Matjila. File picture: Dean Hutton

JOHANNESBURG - The Public Investment Corporation (PIC) yesterday said that it wants to play a more prominent role in the governance of state-owned entities (SOEs) as a condition for further backing from its funds.

PIC chief executive Dr Dan Matjila said investing money in state-owned entities such as Eskom would involve strict conditions that included governance.
Matjila said it would from now on not be business as usual.

“Going forward we have to change course because we have realized the systematic risk nature of Eskom and it is a given that the economy cannot afford this asset to fail. We need to intervene more aggressively in SOEs because the government guarantees are not helping us in times when government finances are also under pressure,” Matjila said.

“We now need to up the game  and see how we play a bigger role in fixing the governance of Eskom and other SOEs. We are in the process of finalizing a document on how we are going to invest in SOEs going forward.” 

The government has in recent years extended bailouts Eskom to keep the power utility afloat.  In 2015, the government sold its 13.9 percent stake in Vodacom to the PIC for an undisclosed sum to fund its R23bn allocation to Eskom.  

The PIC is wholly owned by the government and acts as investment manager for the Government Employees Pension Fund (GEPF), the Unemployment Insurance Fund (UIF) and the Compensation Commission with nearly R2-trillion in assets under management. In March last year the GEPF increased its ownership of Eskom debt through the additional purchase of R8.3 billion of Eskom bonds. At the end of the same period, the GEPF held R73.7bn of bonds and bills in the embattled state-owned utility- making it the largest single owner of Eskom debt by a long way.  

The PIC which has been hoarded with allegations of state capture attempts was last month forced to release the full details of its unlisted investments by Minister of Finance, Malusi Gigaba.  It is the biggest investor in SOEs. 

Abel Sithole, the principal executive officer at GEPF, said the fund was looking at increasing its exposure to offshore markets but would not take the decision hastily.  He added that the GEPF had made an allocation of just more than R100bn to invest in unlisted companies and that it was important to look at governance issues at the unlisted companies the PIC invests in to ensure value for money.   

“While so far we have invested R46bn in the unlisted space, the total exposure we have allocated for is more than R100bn. The balance of the total allocation money sits in other portfolios of the GEPF until such a time that opportunities are presented to invest in,” Sithole said.

- BUSINESS REPORT