PIC declined to rid itself of R1bn exposure to Independent Media for ‘political reasons’

Independent Media owner Iqbal Survé says Sekunjalo Investments, of which he is executive chairman, made an offer to the Public Investment Corporation (PIC) to take over its exposure to the print media company, but this was rejected for “political reasons”.

Survé’s name has been a common feature at the commission of inquiry into issues of impropriety at the PIC since public hearings began in January. On Tuesday, he came to fight back.

He arrived with a legal team in tow and his own evidence leader, advocate Nazeer Cassim.

He said the PIC initially invested R1 billion in return for a 25% stake in the company, but Independent had repaid R150 million, reducing the state asset manager’s capital investment to R850 million.

Impairment

Independent has had difficulties servicing the loan. Its failure to make payments in 2018 led to the Government Employee Pension Fund (GEPF) – whose assets make up the lion’s share of the R2 trillion managed by the PIC – announcing an impairment on the loan of over R1 billion.

Survé said the Sekunjalo Group approached the PIC towards the end of last year with an offer to take over the loan while allowing the PIC to retain its equity.

“I, commissioner, through the Sekunjalo Group’s dividends of all of its investments, was prepared to take on that risk so that GEPF, its beneficiaries and indirectly taxpayers could benefit from that,” he said.

He said the offer would take Sekunjalo from a position of minimal risk to having capital exposure of R2.5 billion to R2.8 billion. The group was prepared to approach Independent’s Chinese investors, who had also injected R1 billion, with the same offer.

Offer initially accepted

The PIC originally accepted the offer, said Survé, adding that both parties’ legal teams had reviewed it and that Independent Media had received communication from a PIC representative stating that it had been approved by the investment committee.

“We were then informed subsequently, just recently in fact, – to quote – that: ‘for political reasons the PIC will not accept this offer’,” Survé told the commission.

He added that the PIC’s decision to reject the offer “is once more indicative of its investment decisions being driven by political motives as opposed to the genuine interests of its investors”.

The PIC was not immediately available for comment.

On Monday, PIC senior credit analyst Thipana Mongalo told the commission the PIC decided to invest in Independent Media despite risks raised in the due diligence report and the GEPF’s reservations about the company.

The concerns related to issues such as the investment prospects of the deal considering that print media is a sunset industry, Surve’s inexperience in the field, and the fact that Independent Media was also involved in legal cases.