Cape Town - The Public Investment Commissioners (PIC), already the largest investment management operation in the country, is set to make major inroads into the property market by upping its property investments from about R1 billion to near its R15 billion limit, it emerged on Friday.
PIC chief executive Brian Molefe said after briefing parliament's two finance committees on plans to transform the PIC into a fully fledged corporation, that finance minister Trevor Manuel's recent announcement that the PIC would pump about R9 billion into properties around the country, mainly aimed at black empowerment, would make it one of the biggest property investors in the country.
It is already the biggest investment management operation in the country, with assets worth more than R360 billion, or a third of the gross domestic product, under management. The aim would be to broaden "the geographic spread of properties owned around the country", Manuel said.
This would be "underpinned by an agreed policy regarding funding of black ownership of property through appropriate institutional vehicles".
Molefe said the management of the property portfolio, which was capped at 5 percent of the government pension funds managed by the PIC, had so far been outsourced, but joint ventures, partnerships and other forms of management could be considered in the future as well.
This was because draft laws now before parliament to transform the PIC into a corporation would give it a legal identity, allow it to attract and retain highly skilled people at market level salaries, do its own research and analysis of investments more thoroughly and install better information technology systems backed up by the technical staff required.
Manuel had said that the PIC, which mainly manages the government's pension funds, would expand the role of its Isibaya Fund in developing infrastructure and job creation, and over the next three years it would invest about R4 billion in public infrastructure and about R2 billion in small and medium-sized enterprises.
As they considered the PIC Bill on Friday, committee members expressed concern about precisely these kinds of directives being given to the PIC by the government. Although they accepted that these were in the national interest, they said the "very wide" powers conferred by the bill on the minister to direct the new corporation's investment drive could undermine the autonomy the bill aimed to establish for the PIC.
PIC officials and legal advisers were asked to consider the bill's wording more closely ahead of public hearings, scheduled to start tomorrow, which would include a presentation by the Financial Services Board.