PIC lifts lid on performance of unlisted investments
The Public Investment Corporation (PIC) has disclosed the performance of its unlisted investment portfolio, which is estimated to have a value of about R140bn.
For a number of years the corporation has provided details of its unlisted investments, which it holds in the Isibaye Fund, though has not indicated how they have performed.
This has led to suspicions that these investments were made primarily for transformation and developmental purposes, rather than on the basis of the soundness of their businesses.
However, PIC spokesman Sekgoela Sekgoela said in response to a query that impact investments in the unlisted portfolio that were less than five years old as at December 2017, achieved an internal rate of return of 9.73%, while those older than five years achieved an internal rate of return of 7.77%.
"Private equity investments that were less than five years, as at December 2017 achieved 6.59% internal rate of return whilst those that were more than five years achieved 8.1% internal rate of return," he said.
Sekgoela said the PIC’s unlisted investment portfolio was still in its early stage of construction and its performance was subject to the "J-curve effect" and was measured in terms of internal rate of return.
The J-curve effect is used in economics to refer to the phenomenon where a country’s balance of trade initially worsens following a devaluation or depreciation of its currency, before it recovers to a higher level than where it started.
"During the past financial year, the PIC continued to invest in sectors with a high developmental impact, such as high job-creation industries like energy, healthcare, affordable housing and student accommodation.
"Driving transformation and contributing towards inclusive growth was the main theme in most unlisted transactions that were approved during 2017-18.
"The PIC strongly believes that the unlisted investment portfolio will continue to grow and the performance will improve as the portfolio matures," Sekgoela said.
The PIC’s listed equity portfolio has achieved a compounded annual growth rate of 10.6% and 18.4% over the past 10 and five years respectively.