PIC assets grow 20% to R3.66trn as profit jumps 70%

Stephen Grootes (0:00)

The massive rally on the JSC over the last year, helping the Public Investment Corporation to report its assets under management surging by 20% in the year to the end of March. It now manages way over 3.6 trillion rand, total income up by over 27%, net profit up quite dramatically as well. The CEO at the PIC is Patrick Dlamini. Patrick, good evening. I really appreciate your time. Thank you. Your equities investments obviously driving a big part of your profit this year. I noticed your unlisted debt and equities were slightly lower than last year.

What led to that drop? Was daybreak perhaps a small part of that?

Patrick Dlamini (0:40)

No, many other assets that didn't perform well definitely contributed to that. But I guess the raging unlisted equities and listed fixed income in terms of bonds, they just were for those ones. But definitely, yes, it was one of those that could have done better, but that we are paying attention to, make sure that we do much better than we have.

Stephen Grootes (1:09)

The unlisted space has really been a bone of contention. It's attracted a lot of headlines. I'm sure it's been a bit of a headache for you. There have been plans to reform the way it's managed. I mean, are you expecting major changes there? Some of those might be beyond your control, but the way that that unlisted portfolio is managed, the way decisions are made, do you think changes are going to come?

Patrick Dlamini (1:32)

Changes will definitely have to come.

We do not have an option, Stephen, those are the things, because we really need to make sure that our unlisted portfolio, as well as unlisted property portfolio, they really do come to the party and we clean them up quite significantly. And we really, we are also reviewing the operating model for both these portfolios, because we do believe that they can really, really improve. And the teams are quite committed in making sure that we make drastic improvements. And we also improve our governance in so far as those areas are concerned. Because it also talks to improving our investment process, because our investment processes at this point in time take way too long.

And there is an element of fragmentation between both the deal teams, as well as the portfolio management teams, which is the middle office. And now we want to make sure that we integrate the team so that the deal teams can own the asset from beginning to end. And I mean to the exit point. Because at some point, we have to be able to exit when you feel that there's no more value that you can derive or create out of an asset. So that's what we want to put in place. The teams are busy working on this. We're presenting to our board strategy towards the end of October this year. And we're hoping that we'll be able to communicate to South Africans how we are going to turn around those two portfolios to make sure that they also get to making and making us proud in terms of their performance deliverables.

Stephen Grootes (3:16)

Overall, I mean, the number is moving in the right direction. To watch South Africa Inc last year and the JSC really doing so well and to know that that money is going into South African pensions must be quite a rewarding feeling.

Patrick Dlamini (3:30)

Indeed, indeed, and we really would love to do more.

Because as you know that we are about commercial returns, but also we are about developmental impact. So the dual mandate says we have to pay attention to all these areas and make sure that we do not compromise the returns as expected by the owners of this money. I mean, this is the money that does not belong to the PIC. It belongs to the civil servants and to the pensioners who are former civil servants in South Africa. And this is the money that is also guaranteed by the taxpayers of South Africa through government and national treasury. And we have to make sure that we demonstrate to every South African that we are doing the best we can and that we end their confidence and restore their confidence in our ability to deliver it. But I must also highlight, Stephen, that in as much as the unlisted, there has been some noise, but also there's been some very sterling performance that came from some of the asset in the space. And you're talking about the troublesome ones, or the challenging one, who actually are less than 1% of the entire asset under management. I mean, you can see in the past 12 months, we have grown the asset under management by over 600 billion. And we were at 32 billion rent below 4 trillion at the end of February, until the Middle East geopolitical dynamics played out between Iran, US and Israel. But we are very much committed into cleaning the underperforming assets and making sure that we turn them around.