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GEPF, trusts left bleeding as Steinhoff shares crash

Dec 07 2017 20:39
Yolandi Groenewald and Nellie Brand-Jonker

Johannesburg - Economists estimate Steinhoff International dropped a further R32.8bn on Thursday, after it lost R120bn of its market value on Wednesday when investors dumped the retailer following CEO Markus Jooste's resignation amid an accounting scandal.

Shares in the furniture and clothing retailer collapsed after Steinhoff announced that it had approached PwC to launch an independent investigation into accounting irregularities, and that SA billionaire Christo Wiese would step in as executive chairperson in the interim following Markus's resignation.

The share price closed down a record 61.42% at R17.61 on the JSE on Wednesday, wiping more than R100bn off the share value to give the company a market capitalisation of R75.89bn by market's close.

On Thursday the retailer fell with a further 43%, which means that the retailer market value plummeted by R200bn in the last week, economic data from the JSE showed.

This bloodbath sparked fears of what the impact on pension funds and unit trusts would be of those who had bet on Steinhoff as a solid investment.

Steinhoff was included in the the Top40 share listing on the JSE and was one of the 15 biggest companies on the exchange, and several asset funds, pension funds and unit trusts invested heavily in what was seen as a star performer. Unit trusts especially gambled on Steinhoff's reputation to deliver solid growth.

The Government Employees Pension Fund (GEPF) on Wednesday emerged as one of the biggest losers. With an 8% shareholding, the GEPF is the second biggest investor in Steinhoff after Wiese.

READ: Steinhoff shares plunge by 62% after CEO quits

The Public Servants Association (PSA), the second largest Public Service trade union and representing more than 230 000 members of the Government Employees’ Pension Fund (GEPF) expected its losses to be severe.

PSA Deputy General Manager, Tahir Maepa said first estimates show that that the GEPF may have lost about R12.5 bn through losses in investments in Steinhoff.

“The GEPF is the biggest single investor in the JSE and losses because of share-price drops on the JSE following the Steinhoff disaster are still unknown,” he said. “The PSA will approach the Public Investments Corporation (PIC) and the GEPF today to determine the full extent of losses.”

A shareholder register of Steinhoff at November 24, as sourced by Moneyweb, listed Wiese as the biggest shareholder with the GEPF coming in second.

READ: SA's Capitalist Class In Crisis: Steinhoff, Naspers Battered

GEPF has a total of more than 8% of shares in Steinhoff, through the PIC and other indirect investments, holding a 8% total share in the retailer. This meant that employees ended up as one of the biggest losers on the day with around R10bn in damages. Eskom and Sasol’s pension funds also invested in Steinhoff, the registry showed.

Deon Botha, Head of Corporate Affairs for the PIC, said the PIC’s exposure to Steinhoff is approximately 10% of shares in issue.

He said the allegations of accounting irregularities by Steinhoff have exposed the company to possible criminal investigations and are of serious concern to the PIC.

“At this stage the PIC is awaiting further information from investigations by domestic and international regulators and/or law enforcement agencies, to decide on an appropriate course of action.”

Other asset managers with stakes in Steinhoff include Allan Gray, Discovery, Coronation, Investec, Sanlam and Old Mutual, with JSE data showing that Steinhoff was the fifth most popular share for funds to invest in.

READ: Steinhoff share-price collapse blindsides optimistic analysts

Coronation’s Industrial Fund's Steinhoff shares made up 7.46% of its total investments, making it one of the most exposed funds to Steinhoff.

NewFunds S&P GIVI South African Industrial Index Fund was probably the most exposed to the crash, with Steinhoff making up 13.06% of the fund’s structure at the end of September.

Overall pension fund regulations exist that prohibit asset managers from investing more than 75% in shares. That means that the funds most exposed to Steinhoff would not contain a lot of pensioner’s money.

Other funds with top heavy investments in Steinhoff include Sanlam’s Denker Capital, whose shares in Steinhoff on 31 October made up 6.8% of its fund composition, the highest with Naspers in second at 6,7%.

In Sanlam Investment Management Value Fund Steinhoff is the third biggest investment in its fund composition, with 4.94% at the end of October. The fund states that it only invests in financially sound companies which offer exceptional value.

Anchor Capital, a general equity portfolio that favours quality stocks, fund structure on 8 November showed it had the second biggest investment in Steinhoff International, with 5.3% of its total investment going to the troubled retailer.


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