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Johannesburg - Fund manager Abax Investments, which has reduced bond purchases from state-owned enterprises, will not follow in the footsteps of Futuregrowth to withdraw funding.
Portfolio manager Rashaad Tayob said Abax, which has R80bn ($6bn) under management, was concerned after the cabinet said a new committee would be formed to oversee SOEs that would be headed by President Jacob Zuma.
The presidency has defended the new plan after analysts said it would limit the finance minister's control over state firms.
"We have significantly reduced our level of SOE purchases over the last three years due to credit concerns," Tayob said on Friday.
Fixed-income asset manager Futuregrowth last week said it would stop lending to six key state firms, citing governance concerns. The asset manager also cited Zuma's new role overseeing the state firms as a concern for investors.
Despite its concerns, Tayob said Abax would not impose a blanket lending freeze similar to Futuregrowth.
"Like Futuregrowth, we were also very alarmed by the announcement that President Zuma would head up a committee overseeing SOEs. In our opinion this has the potential to cause further credit deterioration and stall the reforms that are needed in the SOE sector."
Slow economic growth was also partly to blame for the weaker performance of some SOEs, Tayob said. He also cited cost overruns at state firms, including power utility Eskom's delay in building power plants.
The Reserve Bank said South Africa will record no growth this year.
Eskom, which said on Thursday it had linked up unit 5 of its Medupi coal power station to the grid, had initially planned to complete the entire plant by 2015 but has said it is now expected to be fully operational by 2020.
Futuregrowth said it had cut lending to among others, Eskom and logistics company Transnet. Both Eskom and Transnet have said their finances would not be affected by Futuregrowth's decision.
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