PIC takes wait-and-see stance on stake in Steinhoff
● Steinhoff’s largest shareholder, the Public Investment Corporation (PIC), said on Friday it has no plans to reduce its exposure in the embattled retailer despite its continued woes, a strategy that is being questioned given the high risk attached to the asset.
The PIC, which manages retirement funds on behalf of state employees, has an 8.5% exposure to Steinhoff.
But Sekgoela Sekgoela, PIC spokesman, told Business Times on Friday that it would be imprudent to disclose “our investment strategy in relation to Steinhoff or any investee company for that matter”.
“However, it is necessary to state that Steinhoff is part of the index, which the PIC tracks in terms of its investment mandate, and any decision it takes will have to be in alignment with the mandate and consistent with its long-term outlook,” Sekgoela said.
He added that the PIC was monitoring developments at Steinhoff and was aware of its recently released interim report.
“All we are prepared to say is that the PIC remains invested in Steinhoff as required by the mandate,” he said .
But Asief Mohamed, the chief investment officer at Aeon Investment Management, said: “There’s such a lot of uncertainties and litigation that are hanging over Steinhoff that I would stay away from it because of the contingent risks. It’s not worth taking risk [on].
“The active managers who hold Steinhoff on behalf of the PIC need to answer why they are still invested in the company.”
Coronation Fund Managers, which had a 6.1% shareholding in March, last month halved its stake to 2.62%, citing losses of almost R14-billion as a result of its exposure to Steinhoff. Coronation did not respond to requests for comment.
Others are also trimming their holdings. According to the latest Bloomberg data, Upington Investment Holdings, owned by Christo Wiese, reduced its stake to 0.87%. Besides Upington’s holdings, Wiese also holds 6.2% in the retail group, making him its second-largest shareholder.
But Zwelakhe Mnguni, the chief investment officer at Benguela Global Fund Managers, said it may be too late for the PIC to exit. “They should rather stick it out to try and find where they can realise value slowly as opposed to bailing out,” Mnguni said.
The best time to have got out was before the December 6 announcement, he said.
“The PIC should rather sit and use its voting power to steer the company to a direction where there is some closure, but to walk away now would be too late,” he said.
Babs Naidoo, head of stakeholder relations and communications at the Government Employee Pension Fund (GEPF), whose fund is managed by the PIC, said it would be inappropriate for the GEPF to comment whether the PIC should look at reducing its stake in Steinhoff, given that various investigations are being undertaken.
“The GEPF has indicated previously that it will be guided by the findings of the investigations before deciding on the course of action to take,” Naidoo said.
The GEPF invested its funds under a strategy aimed at achieving long-term growth for the fund, he said. The strategy was focused on ensuring that it can allocate and manage the fund’s assets so that it outperforms its current and future liabilities.
“The GEPF monitors and evaluates its fund performance in totality, focusing on the performance of individual investments as well as the performance of the portfolio as a whole,” he added.
Yet, Steinhoff faces a number of uncertainties, including litigation from shareholders and anxious creditors as well as investigations into its accounting practices.
But as to whether the PIC will consider pursuing any legal action against the retailer for the losses it made, Sekgoela said: “The PIC’s decision to pursue any legal action will be informed by the outcome of the investigation currently being conducted by Steinhoff and any other relevant information flowing out of the company.”
This week Steinhoff’s share price rose as much as 55.47% to R2.13, a week after the release of its interim results. By Friday, the volatile stock had declined again, closing at R1.67. Since January, Steinhoff has shed as much as 82%.