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AVCA -Tshepoe Mahloele

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  • pg 1
									5th AFRICAN VENTURE CAPITAL
  ASSOCIATION CONFERENCE –
            MOMBASA, KENYA

                  NOVEMBER 2005

              Tshepo Mahloele
                     CONTENTS


• Introduction
• The Public Investment Corporation (PIC)
• Asset Allocation Philosophy
• Investment Objective
• Isibaya Fund
• Operational Strategy
• PAIDF
• Governance




                          2
                           INTRODUCTION



• Public Investment Corporation (PIC) founded in 1911 as Public Debt
  Commissioners
• An investment management company wholly owned by the South
  African Government
• Currently a corporate entity established in April 2005 in terms of the
  Public Investment Corporation, 2004 (Act 23 of 2004)
• Invest funds on behalf of South African Public Sector entities
• Top Five Clients:
       GEPF
       Associated Institutions Pension Fund
       Unemployment Insurance Fund
       Compensation Commissioner: Pension Fund
       Compensation Fund


                                    3
            THE PUBLIC INVESTMENT CORPORATION


• Asset classes: Mandate driven
        Equities                                -       38,15%
        Fixed Income                            -       47,39%
        Money Markets                           -        9,81%
        Property                                -        0,79% (5%)
        Structured Investment Products          -        0,28%
        Isibaya Fund                            -        3,57%
•   A critical player in the financial markets
•   Controls 10% of the JSE market capitalisation
•   Largest (government) asset manager in South Africa
•   Major infrastructure financier
•   Major BEE funder
•   Major property owner (urban & rural)

                                     4
               ASSET ALLOCATION PHILOSOPHY


We invest in assets that:
• Enhance the performance objectives of the fund
    return
• Have potential to deliver consistent returns in the long term
    long term investor
• Offer diversification benefits to the total fund
    risk management
• We recognise that tactical asset allocation adds value
    we avoid market timing

• Assets under management grown from R317 billion ($53bn) in
  2003 to currently R461 billion ($78bn) as at March 2005



                                    5
                     INVESTMENT OBJECTIVE




• To add value through tactical asset allocation

• To take advantage of opportunities resulting from Macro and Micro
  Economic environment

• To deliver a Real Return Average of 4% over a three year period

• To target a total fund volatility – maximum of 6% pa through
  diversification




                                    6
                              ISIBAYA FUND



• Infrastructure and BEE

• BEE is a coherent socio-economic process that directly contributes to
  economic transformation in South Africa and brings about significant
  increases in the number of Black South Africans managing and
  controlling the country’s economy coupled with significant decreases
  in income inequalities

• Portfolio return required

• 100% internally managed




                                   7
                       ISIBAYA FUND (Cont’d)



• Invest in Infrastructure, Fund of Funds and Private Equity – (Direct)

• Isibaya Fund achieved a return of 40,89% as at March 2005 and 45% at
  March 2004

• Intention is to establish an Infrastructure Fund for Africa

• Develop partnerships to make impact on rural infrastructure, SMME
  funding, social return investments

• Portfolio approach to COMPLEX BRIEF.




                                     8
                            OPERATIONAL STRATEGY


• Infrastructure
         Bakwena Platinum Toll Road
         N3TC
         AIIF
         SAIF
• Fund of Funds (3rd party PE funds)
         Average R30million funding
         BEE focus
         Diversified Portfolio of funds
         Extension of Isibaya
•   Direct BEE funding
         Job creation
         Entrepreneurship
         Operational involvement
         Skills transfer
         Risk vs. Return
         Market Development

                                           9
                                 PAIDF


•   Objective
•   Investor focus
•   Investment focus
         Transport
         Energy
         Telecommunication
         Water
•   Equity Fund
         Tenure
         Catalyst sponsor
         Long term
         Development capacity
         Out of box – funds as unusual
         Bold - $1 billion African commitment
         Risk pricing
•   Governance
•   Regional impact projects
                                   10
                      PROGRESS ON PAIDF



• Ministers of Finance Recommendation

• Heads of State Endorsement

• Steering Committee & Secretariat

• First commitments December 2005

• First closure $500 million to $1 billion – July 2006

• Final closure end 2007




                                 11
THANK YOU




    12

								
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