Businessman takes PIC to task over loan fees | Fin24
 
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Businessman takes PIC to task over loan fees

May 22 2019 16:13
Sibongile Khumalo

A legal tussle has erupted between a consortium led by businessman Kholofelo Maponya and the Public Investment Corporation (PIC) over the payment of a R45m transaction origination fee for a housing fund with SA Home Loans.

The businessman has mounted a legal challenge over the withdrawal of an offer to the fees, after the PIC in 2015 extended a R9bn loan facility for two special vehicles formed to assist the Government Employees Pension Fund (GEPF) to acquire home loans.

Roy Rajdhar, the corporation's executive head of impact investing, testified before the judicial commission of inquiry into the PIC on Wednesday that Maponya's consortium, MMI, wanted to be paid R45m plus VAT for work done in conceptualising the affordable housing programme for GEPF members.

The commission is investigating allegations of wrongdoing at the PIC, which manages R2.2trn in investments on behalf of public servants.

It is alleged that the R45m was based on a fee of 1% of the lending amount. 

However, a "tacit" agreement for the payment of the fee was withdrawn by the PIC. The withdrawal of the offer is now the subject of litigation, with Maponya's  firm on April 16 issuing summons to the PIC for payment of the funds. 

"'MMI has claimed the fees from both the PIC and SA Home Loans, but the latter parties have denied liability and the matter is currently subject to litigation," said Rajdhar.

On Wednesday,  Ian Sinton, a special counsel at Standard Bank, the majority shareholders in SA Home Loans, testified that Maponya justified the claim on the basis that "it was his alleged personal intervention at the PIC" that made possible the granting of the facility.

Sinton stated how the bank was introduced to Maponya. He said Standard Bank were looking for partners with the capital muscle to take over a 50% stake held by JP Morgan in SA Home Loans after the aftermath of the 2008 global financial crisis. The bank then identified the GEPF, through the PIC, as a potential candidate.

He said as negotiations progressed, the PIC introduced Maponya "in the spirit of transformation, as a leader of a consortium that wished to buy half of JP Morgan's stake" and that the bank was reluctant about involving the consortium.

Maponya is no stranger to PIC funding, as he has had four deals sponsored by the PIC, including the acquisition of a poultry business, Daybreak Farms.

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