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The Unemployment Insurance Fund’s (UIF) investment portfolio saw assets under management (AuM) surge 13% to R135 billion for its financial year to the end of March 2023, helped in part by its exposure to domestic bonds and listed equities.
The portfolio, run by the Public Investment Corporation (PIC) – the largest asset manager in Africa with nearly R2.6 trillion managed – grew assets the most among its public sector clients, the parties said in a joint statement on Monday.
Read/listen: UIF: 115 Ters fraud cases still under investigation
The UIF is the PIC’s second-largest client and has a portfolio of assets making up 5.14% of the state-owned entity’s total AuM.
The organisations said higher exposure to domestic bonds and listed equities positively impacted the fund’s investment growth.
“The UIF portfolio has largely recovered from the emergency selloff in nominal bonds to finance the UIF Covid-19 Temporary Employment Relief Scheme [Ters] of R64 billion,” according to the statement.
The portfolio has 92.05% invested in domestic assets, while foreign equities represent the rest. Listed investments constitute 89.9% of the portfolio, with socially responsible investments (SRIs) making up 10.13%.
Apart from the UIF portfolio, the PIC also has public sector clients such as the Government Employees Pension Fund, the Compensation Commissioner Fund, the Compensation Commissioner Pension Fund, and the Associated Institutions Pension Fund.
Unlisted portfolio
The fund posted an internal rate of return of -5.12% [since inception], resulting from development or impact investments in its unlisted portfolio that have either underperformed or were in distress, which the investment committee said remains a concern.
The investments, which date back to 2015 and were subject to the Mpati Commission of Inquiry that probed allegations of impropriety at the PIC, require remedial actions to legally recover assets, investment committee chair Ogalaletseng Gaarekwe said.
She added that the PIC has not made any new investments into SRI and unlisted investments on behalf of the UIF since 2019.
“Of the 12 unlisted investee companies in distress, three are in liquidation, whilst another three have been placed in business rescue. A further two are under legal dispute, and the remaining four are being restructured and turned around,” Gaarekwe said.
Read/listen: What’s happening at the SA Unemployment Insurance Fund?
In contrast, the fund will see four property investments in its portfolio executed in the current financial year and over the medium term.
As much as R459 million is earmarked for the construction of a 5 352-bed student accommodation development as well as learning facilities in four tertiary education nodes in the country.
New fund launched
In addition, the UIF and the Industrial Development Corporation (IDC) have launched the R5 billion UIF Fund II, co-managed by the PIC.
The fund is aimed at job creation and retention initiatives. It seeks to provide loans across all sectors, with the most recent funding round having approved investments worth R3.8 billion to qualifying firms with others targeted.
The fund has already advanced loan facilities worth R1.7 billion to 33 small and medium enterprises, with 5 310 jobs expected to be created and 7 278 preserved.
Six investments totalling R311 million were made into firms with 26% youth ownership – these are expected to create 560 jobs and preserve 68.
Other investments include R1.032 billion into entities owned by women and R2.4 billion for the IDC’s Black Industrialist programme, while another R1.7 billion was invested in 36 start-ups.
Read:
UIF paid out more than R1bn in December
UIF welcomes wave of arrests over R2.2m Ters fraud
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