Deputy finance minister David Masondo has ruled out the possibility of the Public Investment Corporation’s (PIC) unlisted investment portfolio being shut down or transferred to another state entity, saying any losses in the portfolio are historical.
Briefing parliament’s standing committee on finance on Friday morning in his capacity as PIC chair, the deputy minister said some of the challenges that have rocked the corporation emanate from investments made as far back as 10 to 15 years ago.
“If you take the example of the unlisted portfolio, which is 4.5% of the PIC’s total investment, there are those who argue the unlisted portfolio should be closed or transferred somewhere, either to the IDC [Industrial Development Corporation] or to DBSA [Development Bank of Southern Africa], for instance.
“I think the proposal ignores certain points. The first is that almost R1bn is allocated to the DBSA and R8.5bn to the IDC, and we are discussing with the DBSA how best we should work together to deliver infrastructure.”
He said another reason some say the unlisted portfolio should be closed or transferred is that the credit loss ratio exceeds 39%. This reflects financial mismanagement within the PIC, but Masondo said impairments and the credit loss ratio were driven by historic transactions rather than recent investments.
“The credit loss ratio is a percentage of a loan that is not expected to be recovered or the lender is expected to lose. It’s also an indicator of asset quality or the quality of the debtors and their ability to pay back the money. If you look at the transactions that have given us challenges, insofar as impairment is concerned, 90% of impairments arise from transactions concluded between 2011 and 2017.”
He said since he joined as PIC chair, the investments stand at R3.6-trillion, growing the investments from R2-trillion with an unlisted portfolio that contributed 194,274 jobs to the economy in 2025.
“The key issue is how we are exiting or solving the old bad investments in a manner the PIC does not perpetuate wrongdoing, losing more money, and making sure we do not repeat the same mistakes as our predecessors.”
Masondo said the unlisted portfolio, notwithstanding challenges with investments in Daybreak Farms, Acapulco Trade and Investments and more recently Enabled Capital, among others, has delivered a 16% internal rate of return, exceeding the benchmark set by the client.
“A R100bn investment will generate R16bn for the workers, so it is performing. It has its own challenges, but it is doing, by and large, better in terms of its performance. As I said, many of the bad investments are pre-party investments, and we are doing our best to sort out all the challenges in strengthening our capacity to protect workers’ money and increase their wealth.”
He said the PIC was not pleased with the arbitration process on the Acapulco investment, which determined the asset manager should pay R411m to Acapulco to compensate for the collapse of an agreement involving Lanseria Holdings.
He said the first legal opinion the PIC received indicated prospects of a successful appeal were slim, and the PIC has chosen to heed counsel to avoid frivolous litigation.
PIC CEO Patrick Dlamini said since material irregularities in the Daybreak Food transactions were flagged by auditor general (AG) Tsakani Maluleke, the PIC has engaged the AG and she was satisfied with how the asset manager has dealt with the matter.
“I’m quite positive with the progress, and registration of the bond in favour of the Government Employees Pension Fund for their R250m is under way. We are hoping very early in the new year that matter should finally be registered accordingly.”
Regarding the Acapulco Trade and Investments matter, Dlamini concurred with the minister and senior counsel that the PIC could not continue to take the matter on review.
“We have appointed an independent reviewer to look into where we might have dropped the ball, and we will then be able to act accordingly as soon as the report is finalised.”
He said the asset manager’s chief investment officer, Kabelo Rikhotso, remained on precautionary leave and the board hoped to bring finality to the matter “in the not too distant future”.
“The matter is being dealt with between ourselves and the lawyers representing our CIO, and this week alone we had three face-to-face engagements where we were dealing with some of the specific issues.”
Members of the committee grappled throughout the meeting with requests from the PIC that documents such as forensic investigation reports into employees implicated in impropriety surrounding certain transactions be kept confidential.
TimesLIVE
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