PIC’s assets under management rise by R187 billion in the quarter to September 2020

THE PUBLIC Investment Corporation (PIC) announced on Friday that its assets under management (AuM) had increased by R187 billion in the six months to September, compared with the year to March 2020.

The PIC in its annual report tabled in Parliament reported a decline in AuM, which it attributed to, among other factors, the impact of Covid-19, particularly during the last months of the 2019/20 financial year. AuM fell to R1.907 trillion for the year to March 2020 from R2.131trln a year ago.

PIC chief executive Abel Sithole said at a media briefing on Friday, that the overall investment performance was good for the quarter. Listed investments portfolio outperformed benchmark returns for Unemployment Insurance Fund, among others, while the Government Employees Pension Fund performed on par with the benchmark.

Sithole said unlisted performance was still subdued with an internal rate of return (IRR) of 1.87 percent against the end of fund life target IRR of 8 percent.

IRR is the annual rate of growth that an investment is expected to generate.

“As a significant number of distressed investments have crystalised losses, without a prospect of recovery, consideration is being given to classify these separately. The team continues to implement various strategies on the rest of the distressed portfolio,” he said.

Africa’s largest asset manager’s unlisted properties portfolio underperformed relative to the benchmark.

Sithole said Covid-19 had impacted the retail and office portfolios the most with the industrial portfolio outperforming. Developments were also impacted by time delays. “To date, the approved transactions have been reinvestments into existing assets – Athol Square and V&A Waterfront – however, a large pipeline of prime industrial, prime office and rural and township retail are in the deal pipeline,” he said.

Sithole stated that global markets were volatile and negatively affected by Covid-19 pandemic and that the global risk continued to affect the markets.

“The global equities and bonds portfolio performed well during the quarter relative to the benchmark during the quarter. The rest of Africa portfolio (both listed and unlisted) continues to be challenged by the impact of Covid-19,” said Sithole. The asset manager reported that $275 million (R4.24bn) investments in the rest of Africa were approved as at September 30, 2020.

More than R1.3bn investments were approved in unlisted properties portfolio for the period to the second quarter, cumulatively. The performing portfolio continues to yield the social impact envisaged, Sithole said.

The PIC, which was subject to a Commission of Inquiry on impropriety said a review of all board and board sub-committees terms of references was successfully completed and approved.

Sithole said a review of the delegation of authority was continuing.

He also said the 2020/21 financial year Shareholder`s Compact and Corporate Plan was approved by the Board and National Treasury.

In the asset manager’s annual report the PIC chairperson Dr Reuel Khoza said the entity was well on track to achieve its investment objective of growing clients’ assets before the Covid-19 crisis caused untold damage to financial markets.