PIC looks for higher returns beyond SA

Posted On Monday, 16 April 2012 02:00 Published by eProp Commercial Property News
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The government pension fund could invest as much as $3.8-billion in African private equity as the continent's top public pension manager looks for higher returns beyond its home market

Elias MasilelaThe Public Investment Corporation (PIC), which manages more than R1-trillion on behalf of civil servants accounting for about 10% of SA's JSE market capitalisation, is looking for potential private equity partners, PIC CEO Elias Masilela told Reuters in an interview.

"We are in the process of identifying partners who are going to be vehicles in investing the money on the rest of the continent," he said in an interview ahead of next week's Reuters Africa Investment Summit.

Masilela said the state-run PIC has been given the green light to invest 10% of its portfolio outside South Africa, with half of that - about R50-billion - earmarked for Africa.

Given the lack of liquidity in many sub-Saharan markets, as much as 60% of the Africa money - or R30-billion - could go into private equity, he said.

"(African) markets are characterised by thinly listed equities. So what is likely going to drive us going forward is private equity, developmental funding and property," he said.

"The numbers have not been fully worked out yet, but you can see anything between 40 and 60% in private equity and developmental investing," he said, adding that the rest could go into equities and property.

With annual economic growth rates of 5% or more, but underdeveloped capital markets in many countries, Africa is increasingly becoming a target for private equity investors.

US firm Carlyle Group recently opened offices in Johannesburg and Lagos and is expected to announce the closing of its first Africa fund, while London-based Helios is likely to deploy capital after closing a $900-million Africa fund in June.

Masilela declined to name the private equity investors the fund was in talks with or the timeline for when the funds would be deployed.

The PIC is likely to be a player in infrastructure investments as countries on the continent build and revamp their roads, dams, hospitals and power stations, he said.

Under its former CEO, Brian Molefe, the PIC was known for using its substantial stakeholdings to lobby corporate South Africa for more blacks in senior management.

Masilela said the transformation of corporate boardrooms was still a priority, although he preferred a "behind-closed-doors" approach, rather than "public spats" with business leaders.

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