Johannesburg - The Association for Savings and Investment SA (Asisa) has warned Futuregrowth Asset Management against mobilising fellow fund managers to emulate its decision to suspend additional loans to some of South Africa’s biggest state-owned companies.
Futuregrowth, Africa’s biggest private fixed income money manager, announced last week that it would stop lending money to six South African state companies amid concerns about how they were run and the perceived threats to the independence of the Finance Department.
The company manages R170 billion of assets.
In a letter to Futuregrowth chief investment officer Andrew Canter, Asisa unequivocally discouraged Futuregrowth from gathering support from other fund managers, warning of possible contravention of competition law.
In line with the stance it has taken to steer clear of Futuregrowth’s decision, Asisa said in the letter: “The relationship between a fund manager and its clients is one of a business and a contractual nature. It would not only be inappropriate but possibly illegal in terms of competition law for Asisa to be involved in such matters.”
After Futuregrowth made its decision public, there was speculation that other fund managers would follow suit and turn their backs on state companies, which include Eskom , Transnet, the SA National Roads Agency, the Land Bank of SA , the Industrial Development Corporation and the Development Bank of Southern Africa.
In the letter, dated September 5, Asisa discouraged Futuregrowth from soliciting the input of other fund managers in its correspondence with the state-owned companies, as such a move was inappropriate and “possibly” a contravention of competition legislation.
It warned the company to guard against “collusive” and “restrictive” behaviour in terms of the competition law.
Competition law
Asisa chief executive Leon Campher refused last week to express a view on Futuregrowth’s decision. “Investment managers must make their own investment decisions.”
Canter said yesterday that the company would not seek the co-operation of its peers.
“Each investor must do their own analysis, questioning and assessment of the (state-owned companies’) governance independently, and there has not been any asset management industry co-operation. We will not participate in any such industry co-operation, nor do we expect any proposals in that regard,” Canter said.
He said the company had not had any dialogue, “verbal or written”, with any other asset manager “on our governance research or our market view on the (state-owned companies). Futuregrowth wants to be clear that we were never proposing other investors follow our embargo approach. We cannot guide their decisions, nor would we. Investors must always be independent and make their own decisions.”
But he said Futuregrowth “logically” expected that other investors would also be looking at governance of the state companies. Canter lauded the company’s commitment to transformation, pointing to its Level 2 black economic empowerment rating.
Public Enterprises Minister Lynne Brown said yesterday that she would meet representatives of Old Mutual and Futuregrowth tomorrow. “Government is committed to engage all affected parties, as well as improve channels of communication to avoid these unfortunate actions.”
BUSINESS REPORT