PIC grows at slowest pace in 7 years

Johannesburg - The Public Investment Corporation’s (PIC) growth in assets under management fell to the lowest pace in seven years after equity markets dropped and South Africa’s economy slowed to levels not seen since the 2009 recession.

Assets increased by 2.4% to R1.85trn in the 12 months ended March 31 from R1.81trn a year earlier, the PIC, which manages the bulk of South Africa’s government employees’ pension money, said in its annual report on its website.

Annual absolute growth of assets under management was about R43bn, while net income rose 28% to R424.2m, the PIC said.

The PIC’s portfolio includes more than 12.5% of the equity on the Johannesburg Stock Exchange, more than 42% of all government bonds and 50% of the debt sold by state-owned enterprises.

An index of South African rand-denominated bonds lost 0.8% over the period, while the FTSE/JSE Africa All Share Index rose 0.1%, with only 68 of the benchmark’s 162 securities showing gains in the 12 months. South Africa’s economic growth slowed to 1.3% in 2015 and is expected to expand 0.4% this year, according to the central bank.

Key risks

“Key risks to the domestic growth outlook are structural constraints, electricity supply, the persistence of domestic drought conditions on the agriculture sector and the broader labour market, a more significant slowdown in China and a credit-ratings downgrade to junk,” PIC CEO Dan Matjila said in the annual report. “There is no doubt that we are experiencing difficult times and the road ahead will not be easy.”

Matjila was paid R10.67m for fiscal 2016, according to the annual report. That was a 1.8% increase on his pay a year earlier, when it totalled R10.48m.

“To grow and meaningfully transform the economy, the investment community, both asset managers and asset owners, must ensure that they invest in line with a long-term sustainable investment strategy,” Finance Minister Pravin Gordhan said in the same annual report. “The focus can no longer be on short-term portfolio benchmarks; it must shift to sustainable returns over the longer term.”