GEPF freezes PIC’s R70bn mandate

Africa’s biggest pension fund said it may take as long as a year to negotiate a new mandate with South Africa’s Public Investment Corporation (PIC) that will allow it to enter into new unlisted investment deals.

The PIC oversees a R70 billion unlisted investment fund for the Government Employees Pension Fund (GEPF), but its mandate lapsed in March, said Musa Mabesa, the GEPF’s principal chief executive. While deals initiated before it ended can be completed, new ones can’t be concluded, he said.

The mandate lapsed following a government inquiry into governance shortcomings and alleged corruption at the PIC, a R2.34 trillion fund manager that reports to the state. The GEPF is now negotiating a new agreement with more stringent requirements over “consequence management” among other things, Mabesa said.

“At the moment there are no new investments,” Mabesa said on a virtual presentation on Thursday. “We are finding each other.”

The GEPF has more than R1.61 trillion in funds, with most of those managed by the PIC. The biggest asset class invested in is listed equities.

In May staff at the PIC’s unlisted unit, known as Isibaya, wrote to senior management and the asset manager’s investment committee saying the lapsing of the mandate had put the company into an “existential crisis.” The PIC has refuted this.

Still, the unit missed its annual investment target by 72%.

The GEPF also said that the amount of its money it can invest outside South Africa has been increased to 15% from 10%.

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