PIC still has no asset manager for R90bn

23 December 2008
By Renée Bonorchis
MORE than a year after the Public Investment Corporation (PIC), SA’s largest shareholder, put out a tender for
asset managers to handle more than R90bn, there are still no winners.
Many of SA’s fund managers bid for a slice of the cash and could do with the boost that the PIC’s stamp of
approval would bring, but news on the winning bidders is only expected in the first quarter of next year.
Officials at the PIC were not available to comment yesterday but David Couldridge, a senior analyst at Frater
Asset Management, said he did not think the PIC’s lack of progress on the tender was hampering the
industry.
“However, if mandates are allocated requiring active ownership, it has the potential to increase shareholder
activism for the benefit of all investors and beneficiaries of funds,” he said.
Couldridge said he believed urgency and action would increase among investment managers and investment
owners (pension funds) next year.
“There is growing awareness that the very serious worldwide economic challenges were caused by excessive
risk-taking driven by inappropriate remuneration structures. Alert and active investors, who understood the
business models and included governance in fundamental analysis, would have helped to identify the risk
and prevented investment in banks that pursued reckless lending policies.”
By the end of March, the PIC recorded almost R800bn in assets under management. It is one of the world’s
top 10 biggest government pension fund managers and two years ago it adopted a “core satellite” approach
to its equities portfolio, with 75% managed in-house and the rest by “satellite” managers.
Fatima Vawda, MD of 27Four Investment Managers, said it was important to bear in mind that the PIC had to
get the go-ahead from the Government Employees Pension, on whose behalf the PIC manages the bulk of its
money.
Simon Hudson-Peacock, head of equities at Cadiz African Harvest, said market turmoil had also slowed the
PIC’s progress.