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

Independent Media owner Iqbal Survé says the Sekunjalo Investment Limited group made an offer to the Public Investment Corporation (PIC) to take over the state asset manager’s exposure to the print media company but this was rejected for “political reasons”.

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

Survé arrived at the hearings with a legal team in tow and his own evidence leader, advocate Nazeer Cassim.

He explained that the state asset had initially invested R1 billion but Independent immediately paid it R150 million, which reduced the PIC’s capital investment to R850 million. The PIC also holds a 25% stake in the media group.

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

Towards the end of last year, Survé said that the Sekunjalo Group, of which he is the executive chairman, had approached the PIC with an offer to take over the loan while allowing the PIC to keep 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,” said Survé.

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

The PIC had allegedly accepted the offer, according to Survé, who added that both parties’ legal teams had reviewed it and Independent had received communication from a PIC representative that it was 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.

Survé 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 to comment.

On Monday, a senior credit analyst at the PIC Thipana Mongalo told the commission that 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 involved issues such as the investment prospects of the deal because print media is a sunset industry, Surve’s inexperience in the field and the fact that Independent Media was also involved in legal cases.