Public Investment Commissioners PUBLIC INVESTMENT COMMISSIONERS’ ISIBAYA FUND Neill Maree: Portfolio Manager Fuad Cassim: Isibaya Fund Consultant

Public Investment Commissioners

PUBLIC INVESTMENT COMMISSIONERS’ ISIBAYA

FUND

Neill Maree: Portfolio Manager

Fuad Cassim: Isibaya Fund Consultant


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


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


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


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


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


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


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


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


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


Why Toll Roads?(continued)

• HDI firms obtain cash flows from the work which in turn enable them toRepay their financial commitments; andExpand their business

• At the same time investment returns are created for the PIC


FUTURE PLANS

• Discussions are to be held with other parties to:Strengthen existing relationshipsCreate 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


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


QUESTIONS

Documents

Public Investment Commissioners PUBLIC INVESTMENT COMMISSIONERS’ ISIBAYA FUND Neill Maree: Portfolio Manager Fuad Cassim: Isibaya Fund Consultant