PIC ‘could still in­vest in SAA’

De­ci­sion hinges on turn­around strat­egy

Business Day - - FRONT PAGE - Bekezela Phakathi Par­lia­men­tary Writer phakathib@busi­nesslive.co.za

The Pub­lic In­vest­ment Cor­po­ra­tion has not ruled out in­vest­ing in the broke na­tional car­rier, SAA.

The Pub­lic In­vest­ment Cor­po­ra­tion (PIC) has not ruled out in­vest­ing in the broke South African Air­ways (SAA).

In its cor­po­rate plan ear­lier in 2017, the strug­gling air­line listed the PIC as a po­ten­tial source for fund­ing of about R6bn for the next fi­nan­cial year.

The PIC con­firmed on Tues­day that it had been ap­proached by SAA, but it re­jected the air­line’s ini­tial fund­ing re­quest.

PIC CEO Dan Matjila told Par­lia­ment’s stand­ing com­mit­tee on fi­nance on Tues­day that SAA had not met the cor­po­ra­tion’s in­vest­ment cri­te­ria.

He cited the gover­nance and man­age­ment cri­sis af­flict­ing the na­tional car­rier as well as its poor bal­ance sheet as rea­sons.

“[How­ever] we have seen pos­i­tive changes. The board has been strength­ened now, the CEO has been ap­pointed. Now the turn­around plan has to be im­ple­mented and un­for­tu­nately it will take a few data points to con­vince us that the turn­around strat­egy is work­ing.

“So we wait and see. Once we have enough data to [con­vince us] that it has turned around, the bal­ance sheet is look­ing much bet­ter and there is sta­bil­ity, then we will con­sider [the re­quest],” Matjila said.

The PIC is wholly owned by the gov­ern­ment and acts as the in­vest­ment man­ager for the Gov­ern­ment Em­ploy­ees Pen­sion Fund, the Un­em­ploy­ment In­sur­ance Fund and the Com­pen­sa­tion Com­mis­sioner.

It has about R2-tril­lion in as­sets un­der man­age­ment.

The gov­ern­ment aims to dis­pose of all or part of its 39.7% stake in Telkom to bail out strug­gling SAA and the South African Post Of­fice.

In his medium-term bud­get pol­icy state­ment in Oc­to­ber, Fi­nance Min­is­ter Malusi Gi­gaba said the gov­ern­ment aimed to dis­pose of a por­tion of its Telkom shares to avoid a breach of the ex­pen­di­ture ceil­ing. The gov­ern­ment re­gards the PIC as a po­ten­tial buyer of its Telkom shares.

The PIC al­ready has a stake of about 8% in the tele­coms op­er­a­tor. Matjila, how­ever, re­mained tight-lipped on Tues­day re­gard­ing the PIC’s po­si­tion on the Telkom shares mat­ter.

Spec­u­la­tion is that Matjila is con­cerned that a pur­chase of the 39.7% share­hold­ing would leave the com­pany over­ex­posed to Telkom. The PIC is said to be open to pur­chas­ing about R2bn in Telkom shares, which will in­crease its share­hold­ing to about 18%.

It also emerged in Par­lia­ment on Tues­day that the PIC board had not com­plied with Gi­gaba’s re­quest that the cor­po­ra­tion fur­nish terms of ref­er­ence for a foren­sic au­dit of all its in­vest­ments by Oc­to­ber 23.

The PIC aims to meet Gi­gaba on a date to be set.

Cosatu lead­ers have asked for as­sur­ances that work­ers’ pen­sions will not be used to bail out SAA or other ail­ing sta­te­owned en­ter­prises. In sub­mis­sions to the com­mit­tee on Tues­day, the fed­er­a­tion called for the strength­en­ing of over­sight and ac­count­abil­ity of the PIC.

/File pic­ture

Wait and see: Pub­lic In­vest­ment Cor­po­ra­tion CE Dan Matjila told MPs the as­set man­ager had re­jected SAA’s ini­tial re­quest due to poor gover­nance.

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