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Steinhoff fallout: Fedusa, PIC to discuss pension damage control

Dec 11 2017 12:22
Eugenie du Preez

Cape Town - The Federation of Unions of South Africa (Fedusa) will meet the Public Investment Corporation (PIC) on Monday over the Steinhoff meltdown, amid mounting concern over the fallout on workers and pensioners from the biggest corporate scandal the JSE has ever experienced.

The purpose of the meeting is to find ways of salvaging workers' pensions managed by the PIC.

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 billionaire Christo Wiese would step in as executive chairperson in the interim following Markus's resignation.

An estimated 90% or nearly R194bn was wiped off Steinhoff's market value in a week of unprecedented corporate turmoil, which also saw the market value of the PIC’s 10% stake in the disgraced company tumble from an estimated R20bn to just over R2bn.

The bloodbath sparked fears of what the impact on pension funds and unit trusts would be of those who had placed their trust in Steinhoff as a solid investment.

Steinhoff is included in the the Top 40 share listing on the JSE and is one of the 15 biggest companies on the exchange. 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 Public Servants Association (PSA), the second largest public service trade union which represents more than 230 000 members of the Government Employees’ Pension Fund (GEPF), expects its losses to be severe.

PSA deputy general manager Tahir Maepa said first estimates showed that the GEPF could have lost about R12.5bn through losses in investments in Steinhoff.

The GEPF has emerged as one of the biggest losers as the second biggest investor in Steinhoff after Wiese, who may well may have lost over R30bn in less than three days.

The GEPF's total of 8.56% of shares in Steinhoff, through the PIC and other indirect investments, means that employees ended up as some of the biggest losers with around R10bn in damages. Eskom and Sasol’s pension funds also invested in Steinhoff, the registry showed.

According to Deon Botha, head of corporate affairs for the PIC, the PIC’s exposure to Steinhoff is about 10% of shares in issue.

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.

The company announced on Monday that it has appointed an international advisory team as well as an operational adviser. It asserted that despite its difficult situation, trade will continue.

“Trading in the underlying businesses across the globe continues uninterrupted particularly in the pre-Christmas period,” Steinhoff said in a note to shareholders.

Steinhoff shares were trading at R8.03 at 12:04 on the JSE on Monday, up 33.7% from Friday's close of R6.00.

fedusa  |  gepf  |  pic  |  steinhoff international holdings
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