Africa’s Largest Investment Manager Plans Big Shift to Private Assets

By Nick Hedley

South Africa’s Public Investment Corporation (PIC), the largest investment manager in Africa with about R2.5 trillion ($160 billion) in assets under management, plans to increase its holdings of unlisted assets to 25% of its portfolio from just 5% currently.

The PIC, which has a new chief investment officer, Kabelo Rikhotso, invests on behalf of public sector employees. Its main clients include South Africa’s Government Employees Pension Fund (GEPF) and the Unemployment Insurance Fund (UIF).

Earlier this year, the PIC and the GEPF signed a new unlisted investment mandate, which is partially aimed at boosting enterprise development and job creation. The investment manager is also reviewing its mandates with other clients.

In a recent parliamentary oversight committee meeting, Rikhotso, who took on the CIO role in May, said the PIC previously had one unlisted mandate from the GEPF and UIF – a private equity allocation of about R70 billion.

Under the new mandate, private investments would be made via fund of funds vehicles targeting South Africa and the rest of the continent, a private equity vehicle focused only on South Africa, a rest-of-Africa fund, and an agricultural fund. The PIC would also consider funding real estate developments in under-supported rural areas.

These investments would seek strong financial returns, plus “positive societal impact.” Rikhotso said there were opportunities in mineral beneficiation and other sectors.

The PIC’s acting CEO, Makano Mosidi, said the firm would build out its investment team to implement the unlisted mandate.

In terms of listed assets, about 80% of the PIC’s portfolio is passively managed. The rest is managed internally and by external fund managers, including Lwazi Capital and Mergence Investment Managers.

In early June, the PIC’s chief operating officer, Vuyani Hako, was placed on “precautionary suspension” after allegations of misconduct were made against him.

In the parliamentary oversight committee meeting, Mosidi said Hako’s suspension was pending the outcome of an investigation, which was “at an advanced stage.”