Grant Pattison. Picture: FINANCIAL MAIL
Grant Pattison. Picture: FINANCIAL MAIL

The Public Investment Corporation (PIC), which is the largest investor in SA, has responded to suggestions that it invested in Edcon because of political pressure, saying that it was in the national interest to contribute to the turnaround of the struggling retailer.

“The PIC has been following media reports suggesting that it has been politically pressured to invest in Edcon, a nonfood retailer operating in Southern Africa. The PIC would like to state, at the outset, that this suggestion is misinformed.  PIC’s investment is underpinned by sound commercial, social and governance principles,” it said in a statement.

Deon Botha, head of corporate affairs at the PIC, said the state-owned asset manager, which oversees more than R2-trillion in government employees’ pension money and other government funds, had followed the necessary procedures.  

“From a governance point of view, the investment in Edcon was made on behalf of the Unemployment Insurance Fund (UIF) and was in line with the client’s investment mandate. The PIC had an extensive engagement with all the stakeholders, including the UIF, labour unions and Edcon, before making the final investment decision. 

“In making the investment decision, the PIC subjected the transaction to the PIC’s rigorous internal investment processes and did not succumb to any external political or union pressure as suggested by some media houses,” he said.

A recapitalisation programme for Edcon was implemented in terms of which the debt and capital structure of the retailer was restructured. This programme included the contribution of cash and rent reductions, totalling about R2.7bn, into the Edcon group, with the PIC investment worth R1.2bn.

However, Edcon CEO Grant Pattison said on Thursday unions had played an important role in getting the PIC on board. He also said  the recapitalisation programme had been a success.

“It was in the national interest to prevent job losses. The unions did their job in placing pressure on the PIC and others to invest in the recapitalisation programme. We appreciated the help from unions,” Pattison said.

Botha said the “UIF’s socially responsible investment mandate allows the PIC to invest in projects that create and sustain jobs”. He said the UIF’s investment was just one component of interventions by multiple stakeholders aimed at preventing the loss of over 140,000 jobs across the value chain of Edcon. Other interventions included the removal of all interest-bearing debt.

“The result of this is that UIF is now one of the shareholders in Edcon. Had there been no intervention by both the UIF and other stakeholders, jobs would have been lost in Edcon and companies that service Edcon. In the final analysis, the UIF would have to bear the burden of having to pay unemployment insurance claims,” he said.