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Treasury reveals: PIC invests R13bn in struggling Afrisam

Oct 19 2016 06:38
Liesl Peyper

Cape Town – The Public Investment Corporation (PIC) holds a R13bn investment in the struggling cement manufacturer Afrisam. 

In a detailed list of its investments in unlisted companies provided to Parliament’s Standing Committee on Finance, the PIC disclosed that it has a 65.99% interest in the Afrisam Group. 

The PIC invests R44.6bn in unlisted companies through its Isibaya Fund, established in 1999, in projects that have a developmental mandate. 

READ: PIC grows at slowest pace in 7 years

The PIC’s list shows that Afrisam has since 2008 received a number of bailouts from the entity, which is responsible for managing the assets of among others the Government Employees Pension Fund. 

The PIC’s exposure to Afrisam includes a debt loan totalling R1.5bn, equity totalling R4.17bn, an investment in a subsidiary Afrisam Pik of R1.7bn, a loan of R214.9m converted to equity, another loan of 3.2bn converted to equity and a bridge loan of R2.55bn. 

Financial Mail recently reported that Afrisam has been struggling for some time, due to new competitors in the cement space, including Sephaku Cement and Mamba Cement. In addition, cement supplies currently outstrip demand and cheap imports from Asia have worsened the situation. 

The PIC has in the past come under fire for its “questionable” investments, particularly from DA spokesperson on Finance David Maynier who on a previous occasion said he wanted insights into the PIC’s “direct loans” to “obscure companies”. 

The PIC, however, is unapologetic about its developmental mandate and Deputy Minister Mcebisi Jonas, who is also the chairperson, has repeated that it would invest a considerable amount in the manufacturing, infrastructure, mining and beneficiation sectors in the next three to five years to drive economic growth and job creation.

He acknowledged though that the PIC needed to balance its mandate to invest in companies that will serve South Africa’s developmental agenda with the imperative to yield a positive return on investments.
 
“We need to find a balance between transformation and getting value for money. Yes, the PIC needs to play a transformational role, but not to the detriment of investors,” Jonas said.

Read Fin24's top stories trending on Twitter:

afrisam  |  pic  |  loan  |  debt  |  cement
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