Ninety One launches R10bn Recovery Fund |
NINETY One share price traded in the negative territory for the better part of yesterday despite the global asset manager launching a R10 billion Ninety One SA Recovery Fund in association with Ethos Private Equity to help the South African economy with recovery post Covid-19.
The fund’s objective is to support the preservation of the country’s productive capacity and economic recovery from the effects of the Covid-19 pandemic while also seeking an attractive return for investors.
Ninety One share price declined by almost 2 percent to R46.18 a share in intraday trade before closing at R47.07.
Yesterday Ninety One said the country has seen growing evidence of the devastating impact of the protracted lockdown on the economy in the last few weeks.
“There is now a body of evidence suggesting that the contraction in gross domestic product (GDP) could be as severe as 10 percent, and the country looks set to experience the worst recession in living memory. If productive capacity is not preserved, South Africa could experience an L-shaped recession, whereby it takes a decade for the economy to return to its 2019 size,” the group said.
Last month, the South African Reserve Bank estimated that the country’s GDP is likely to contract by 7 percent in 2020.
Ninety One listed separately in March on the London Stock Exchange and the JSE and it manages more than R2.29 trillion in assets as at the end of March.
Ninety One founder and chief executive Hendrik du Toit said the lockdown, while necessary to protect the nation’s health, had been akin to putting the economy into an induced coma.
“South Africa faces a once-in-a-generation economic challenge. The SA Recovery Fund is a market-led impact initiative to mitigate the negative economic impact of the Covid-19 pandemic, while seeking a commercial return. With this fund, we would like to support quality businesses and protect the nation’s productive capacity, which will in turn preserve thousands of jobs and support the South African tax base,” Du Toit said.
Ninety One is targeting a first close of the fund next month, with funding to be raised through two closes from South African institutional investors and the group said the fund aims to achieve a positive impact with attractive returns through a clear set of investment outcomes.
Stuart Mackenzie, the chief executive of Ethos Private Equity, said the SA Recovery Fund provided Ethos with a unique opportunity to partner with Ninety One on a critical funding initiative at an important moment for the nation.
“Our experience and institutional capabilities in private equity ideally position us to play a value-adding role in the execution of the Ninety One SA Recovery Fund’s investment strategy,” Mackenzie said.