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PIC: We're not being 'politically pressured' to save Edcon

Jul 04 2019 20:05
Lameez Omarjee with Bloomberg

The Public Investment Corporation has refuted reports that it was pressured by trade union federation Cosatu to invest in retailer Edcon.

Last week Bloomberg reported that PIC, which manages more than R2trn in funds, invested R2.7bn in Edcon. According to the Bloomberg report Cosatu had pressured the PIC to bail out Edcon in order to save jobs.

But on Thursday the PIC issued a statement in response to several media reports on the matter, clarifying its decision to invest in Edcon, on behalf of the Unemployment Insurance Fund (UIF), was based on "sound commercial, social and governance principles." 

"From a governance point of view, the investment in Edcon was made on behalf of the Unemployment Insurance Fund and was in line with the client’s investment mandate. The PIC had an extensive engagement with all the stakeholders, including the UIF, labour unions and Edcon before making the final investment decision. 

"In making the investment decision, the PIC subjected the transaction to the PIC’s rigorous internal investment processes and did not succumb to any external political or union pressure as suggested by some media houses," the statement read.

The PIC added that binding agreements had been concluded among Edcon's existing secured lenders which will result in a recapitalisation programme for the retailer. Of the R2.7bn commitment to Edcon, the PIC's investment totals R1.2bn, the fund manager said.

The PIC said that the UIF's mandate allows for it to invest in projects to create and sustain jobs. As a result of a number of interventions undertaken in the case of Edcon, over 140 000 job losses were prevented.

"The result of this is that UIF is now one of the shareholders in Edcon. Had there been no intervention by both the UIF and other stakeholders, jobs would have been lost in Edcon and companies that service Edcon," the statement read.

The UIF would have had to pay unemployment insurance claims if the investment had not been made, the PIC said.

The fund manager added that it would continue to implement its impact investing mandate as it is necessary to achieve inclusive growth.

edcon  |  cosatu  |  pic  |  labour  |  jobs  |  investment
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