By Loni Prinsloo.
Africa’s largest fund manager said assets under management reached a record R3 trillion last week, buoyed by improved sentiment following May 29 elections that resulted in a coalition government.
Assets under management by the Public Investment Corp, which handles the pensions of government workers in South Africa, reached the key threshold on Septeber 26, Chief Investment Officer Kabelo Rikhotso told reporters at a results presentation Wednesday.
Consumer confidence in Africa’s biggest economy surged in the third quarter to a five-year high while household wealth jumped after markets rallied following the formation of a so-called government of national unity. President Cyril Ramaphosa of the African National Congress — which lost its majority for the first time since 1994 in the May vote — set up the coalition that includes the business-friendly Democratic Alliance and other parties.
“I feel very positive about the country and we have seen a huge improvement,” Rikhotso said.
The PIC’s assets under management for its fiscal year that ended March 31 rose 3.6% after stronger returns from international and listed portfolios countered muted economic growth in South Africa.
AUM climbed to R2.69 trillion in the year, Chief Executive Officer Abel Sithole said at the briefing. It will pay the government a 141 million-rand dividend, he said.
In the period under review, the continent’s most industrialised economy experienced record power outages in the PIC’s fiscal year, and a financial watchdog placed the country on a global dirty-money list in February of 2023, which subjects business transactions with a South African component to more scrutiny.
The constraints contributed to the economy expanding just 0.6% last year, the smallest increase since the 2020 contraction due to the Covid-19 pandemic. Gross domestic product has grown by an average of less than 1% over the past 10 years — insufficient to cut a 33.5% unemployment rate, among the world’s highest.
But since the May 29 election, the rand has gained 5% to the dollar and local-currency bonds have outpaced all peers in an emerging-market index with returns of 24% in greenback terms.
The PIC’s profit climbed 22% to R271 million in the year to end-March, boosted by the performance of its foreign, unlisted and fixed-income portfolios, the PIC said in a statement.
The fund manager has recovered R690 million of R4.3 billion it invested in Ayo Technology Solutions, Sithole said. The PIC took Ayo — a company linked to South African businessman Iqbal Surve — to court to recoup the investment, but lawyers for the parties settled a deal last year.