The Public Investment Corporation discloses details of its unlisted investments for the first time

The Public Investment Corporation (PIC) presented its 2015/2016 annual report to Parliament’s Standing Committee on Finance on 18 October 2016.  This presentation included disclosure of the PIC’s unlisted investment portfolio for the first time. 

Unlisted investments[1]

The major elements relating to its unlisted investments are the following, as set out in the PIC’s presentation:

  • Its total unlisted investment portfolio amounts to an amount of R44.6 billion, representing 2.4% of its aggregate assets under management of R1.86 trillion. It should be noted that the figure of 2.4% indicated by the PIC relates to private equity and developmental investments but excludes unlisted property investments which represent 5.22%.
  • Of the unlisted investments, R37.4 billion are in South Africa, with the major sectors being manufacturing (29%), renewable energy (16%), housing (9%), agriculture (7%) and property (6%).
  • The balance of R7.2 billion of the unlisted portfolio is invested in the rest of Africa, mainly in financial services (33%), manufacturing (32%) and telecommunications (24%).
  • The PIC classifies R23.5 billion of its unlisted portfolio as developmental investments and R21.1 billion as private equity;
  • The return on the unlisted portfolio was 9.68% over 24 months.
  • Within its broader aim of long-term financial sustainability, emphasis is placed on using its unlisted portfolio in growing the South African economy through developmental and private equity investments and to facilitate broad-based economic empowerment and skills development.
  • Developmental and private equity investments are also made in this portfolio within a broader African context.

In order to provide an overall perspective of how the unlisted portion fits into the PIC’s aggregate portfolio of R1.86 trillion, the following statistics are taken from the presentation:


Percentage of total investments

Breakdown of category

Category as percentage of total investments

Domestic Listed


Listed equity


Listed bonds


Cash/money market


Domestic Unlisted


Private equity






Non-domestic Listed






Non-domestic Unlisted





Note:        the unlisted investments (excluding property) amount to a total of 2.7% in the above table, showing a discrepancy in relation to the 2.4% total mentioned by the PIC in the summary of its presentation and referred to above.

Controversial investments

A list of individual investments that make up the unlisted portfolio was published on the website following the PIC presentation to the Standing Committee on Finance.  Public comment has centred on two investments from this list: R1.27 billion equity and debt in Independent Media and R306 million in equity and loans to VBS Mutual Bank. 

In respect of the Independent Media investment, the rationale was set out in the PIC’s presentation to the Standing Committee on Finance on 10 May 2016, where it was stated that

The media industry remains largely untransformed in terms of black ownership …  We believe that this investment meets the key transformation objectives of the DTI surrounding ownership, management and being broad-based ….  The previous international shareholders used to declare and pay out significant amounts of dividends and not much of the company’s proceeds were invested in the South African economy.  By supporting the Sekunjalo consortium to bring back the asset into South African hands, we’ve ensured that the asset will be utilised for the benefit of the South African economy.

In respect of the Independent Media investment, the list of PIC investments referred to above reflects an internal rate of return of minus 6.15% on the equity portion of R166m and a positive return between 10% and 15% on the debt portion of R1.1 billion. 

Regarding VBS Mutual Bank investment, public interest is fuelled by the fact that this is the entity that had reportedly lent funds to President Zuma to enable him to repay the amount owing on the Nkandla renovations, in terms of the findings of the Public Protector.  The return on this investment is reflected as ranging between 9% and 12.5% on the R300m debt and 14.36% on the R6m equity portion.

As far as the PIC itself is concerned, it is to be noted that its client base is made up of public institutions, with the Government Employees Pension Fund (GEPF) representing 88.2% of PIC’s assets under management.  The PIC reports to the Minister of Finance, who is the shareholder representative on behalf of the South African Government, which is in turn its sole shareholder.  Funds invested by the PIC on behalf of the GEPF achieved a 10.98% return over the most recent 3-year period (compared to its benchmark of 11.04%). 

In relation to the performance of its unlisted portfolio, the PIC’s 2015/2016 annual report states that “unlisted investments also hurt performance over 3 years”, in addition to the fact that “underperformance in global bonds detracted the most from relative returns”. 


As our own comment on the performance of the unlisted portfolio of private equity and development assets, it may be stated that it is usual for managers of general portfolios such as the PIC to include a small, higher risk portion in their portfolio.  This higher risk portion would then potentially attract higher returns than lesser risk assets.  The general experience of funds that are active in these areas is that their returns (when judged on an annual basis) tend to be less predictable than those consisting mainly of listed equity and bonds.  Quite apart from valuation issues that may affect unlisted investments, they may take longer than initially expected to show a positive return on their eventual realisation (usually through a sale or listing).  A higher percentage of private equity investments may also have to be written off or impaired than is the case in the listed category (simply because of a higher risk element)  -   but those unlisted investments that are successful, may far outstrip other investments in their returns.  Similar comments may be made on the developmental side of the portfolio, although the success of investments in that area also need to be judged within a more general context and not just within strict short-term financial return criteria.

The fact that the PIC had not released details of its unlisted assets in the past, led to much speculation about the potential beneficiaries of such investments.  The transparency that the PIC has shown in the publication of these details will certainly lead to a greater degree of public confidence in the management of all aspects of the very substantial investment portfolio which the PIC administers, seen not only from the pension perspective of South African government employees but when considered within the broader context of the South African economy in general.

[1] Except where stated otherwise, all statistics are taken from the PIC’s presentation of 16 October 2016 to the Standing Committee on Finance, the PIC’s 2015/2016 annual report and a list of unlisted investee companies provided to the Standing Committee on Finance, as published on