PUBLIC INVESTMENT CORPORATION
TIM COHEN: Why a red warning light is blinking over these sizeable assets
The PIC is under pressure now to invest in local, unlisted businesses, and it claims to want to do so
With SA’s public finances under strain at the same time as the government wants to launch a R50bn stimulus package, lustful eyes inevitably turn to the Public Investment Corporation’s R2.1-trillion in investments. Surely the PIC could help, should help, or should be made to help? However, there is a background problem. The PIC is fund manager to the public sector pension funds, mainly the Government Employees Pension Fund. Because this is a defined benefit fund in which the level of benefits is heavily borne by the state, and which is weighted to provide pensioners with a high level of benefits, it is crucial that the PIC performs well. Happily, this has historically been the case. The PIC’s assets under management have grown from R461bn in 2005 to R2.1-trillion. Fabulous! In fact, not so much. The increase constitutes a 12.5% annual compound return. As it happens, the level of the JSE all share in 2005 was 12,784 and it is now around 57,000. That is a 12.2% compound annual return. ...
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