PUBLIC INVESTMENT
COMMISSIONERS’ ISIBAYA
FUND
Neill Maree: Portfolio Manager
Fuad Cassim: Isibaya Fund Consultant
Public Investment Commissioners
BACKGROUND
• The PIC is not a Development Agency but
acts as investment manager in terms of the
PIC Act
• The PIC manages funds on behalf of various
clients, including the Government Employees
Pension Fund
• Investments have traditionally been made in
listed securities, i.e. bonds and equities
• These investments are not of a developmental
nature
Public Investment Commissioners
BACKGROUND
(continued)
• The PIC has, however, also been mandated
to invest in “investments which promote social
responsibility and infrastructure”
• The Isibaya Fund has been created to house
these investments
• The PIC may utilise up to 3,5% of the assets
under management for Isibaya Fund
Investments
Public Investment Commissioners
Which Investments or Asset
Classes?
•
•
•
•
Private Equity
Privatisation
Infrastructure
The promotion of sustainable Black
Economic Empowerment holds the key
to the success of the Isibaya Fund
Public Investment Commissioners
What kind of returns are
targetted?
• Bear in mind that the PIC acts on behalf of
clients in a fiduciary capacity
• All transactions should be financially viable to
qualify.
• Investments should have the potential to
provide returns commensurate with the risks
attached to the particular assets
• A real return of 10% is therefore targetted
Public Investment Commissioners
Does this mean that there is a possible
conflict between investment return and
socially responsible investments?
• No
• Some investments have a good change to
provide higher than expected returns
• Other investments could, however,
underperform
• In the long-term a well diversified portfolio of
investments could provide both the required
investment returns and the necessary social
impact
Public Investment Commissioners
How does the Isibaya Fund
operate in practise?
• Investment proposals are currently
evaluated on a deal-by-deal basis
• Investment proposals are submitted for
consideration to the PIC’s Investment
Committee
• The Investment Committee then makes
a recommendation to the PIC Board
Public Investment Commissioners
Will the PIC consider partnerships
with other market participants?
• Yes
• The PIC cannot operate in isolation in the
South African Financial Markets as this could
lead to a so-called “paper-chase”
• Possible partners include the DBSA, the NEF,
the IDC, the South African Infrastructure Fund
and even other pension funds
• The PIC already has sound working
relationships with a number of other market
participants
Public Investment Commissioners
What has the PIC achieved?
• The PIC has invested in, amongst others, the
N3 Toll Road, the N4 Bakwena Toll Road and
the Phamine Tin Mine
• These investments have been structured to
yield a return over the medium to longer term
– success or failure can therefore not be
determined immediately
Public Investment Commissioners
Why Toll Roads?
• In the first place it meets the Isibaya Fund’s
requirement to invest in infrastructure
• It creates an opportunity to finance HDI firms
to enable ownership
• Toll Roads create jobs and HDI firms can
actively participate in not only the
construction phase, but also in the ongoing
maintenance program
Public Investment Commissioners
Why Toll Roads?
(continued)
• HDI firms obtain cash flows from the
work which in turn enable them to
Repay their financial commitments; and
Expand their business
• At the same time investment returns are
created for the PIC
Public Investment Commissioners
FUTURE PLANS
• Discussions are to be held with other parties
to:
 Strengthen existing relationships
 Create the platform for future co-operation with
other role-players
• The Isibaya Fund is in the process of
formulating policies with regard to BEE
Charters
Public Investment Commissioners
FUTURE PLANS
(continued)
• BEE Charters should provide guidance
to the market in general on investment
requirements
• This may in turn lead to a revised
investment strategy for the Isibaya Fund
Public Investment Commissioners
QUESTIONS
Public Investment Commissioners