Investors flee Mi-Plan
ON THE MAT: UNIT TRUST HIT BY TAXI INDUSTRY DEBT, LOSING INVESTMENTS
Fund manager details what went wrong at Bridge Taxi.
Investors have fled the MiPlan Enhanced Income Fund, after it announced in February it would ringfence nearly R1 billion in debt assets exposed to Bridge Taxi Finance.
The notes were in default and would be “side-pocketed” in a separate fund (Mi-Plan Enhanced Income Retention Fund), from which no redemptions would be permitted.
The fund lost nearly one third of investments in February, after it announced this.
At the end of January, the enhanced income fund had R11 billion in assets under management.
According to its published fact sheet for February, this had declined to R7.1 billion (with the R950-odd million that was side-pocketed to be “added back”).
According to industry data for March, this has since dropped to R5.6 billion, nearly halving in size.
Popular fund
The fund, popular as a building block for client portfolios at wealth managers including PSG and Brenthurst Wealth, has generated an annual return of 8.2% versus 6.3% for the benchmark (Stefi).
This outperformance also helped attract over R3 billion in institutional money (as at 31 December, according to Association for Savings and Investment South Africa data).
At the beginning of March, Vunani Fund Managers – which manages the funds – impaired the “fair value” of the four debt instruments in the side-pocketed fund. Each received a different adjustment, but the average across the four securitised structures is around 30%.
Industry data shows the retention fund’s size is now R647 million (with a 31.84% “return” in the past month – the impairment).
Background
In the most recent fund fact sheet (“minimum disclosure document”) Vunani Fund Managers portfolio manager Rowan Williams-Short, who manages the Mi-Plan Enhanced Income Fund, for the first time offers a fairly detailed explanation of what happened at Bridge. (This document is not available on Mi-Plan’s website; it is published on Vunani’s.)
He says the fund has “exposures to Martius and Redink notes which are securitised special purpose vehicles that have ownership of pools of minibus taxis and lease payments [income share agreements], with no overlap of underlying assets”.
Both Martius and Redink debt is listed on the JSE. Martius comprised 4.74% of the fund’s assets, while Redink was a further 3.97%.
At about 8.8% – and with both linked to a single entity, Bridge – this was the second-largest exposure aside from South African sovereign debt (at 25.6%).
Death and overdue payment
“In January, the founder, CEO and largest shareholder of Bridge Taxi and its operating company Mokoro [Martin Bezuidenhout] passed away suddenly,” says Williams-Short. “Then we learnt that Mokoro had an overdue payment to Imperial Logistics and that there had been an underpayment of interest due in a structure outside of either Martius or Redink.
“Those failures caused a socalled ‘event of default’ under which all lenders must be informed even if their own investments have been fully serviced.”
Incidentally, Bezuidenhout was CEO of Transaction Capital’s SA Taxi Finance in 2008 to 2010. He founded Mokoro with Gerhardt van Wyngaard in 2013. It is unknown how he died.
The struggling taxi industry has had an impact on Transaction Capital, which owns the largest credit provider to that market (SA Taxi). It is trying to restructure about R5.3 billion of debt.
While there has been some recovery from the lows, shares of Transaction Capital are down more than 80% from their alltime high.