Edition: March - May 2015


A loud silence

Pensioners’ money is at stake over the investment in INMSA.
High time that the PIC explained it..

The state-owned Public Investment Corporation has more than R1,6 trillion in assets under management. Roughly 90% of these are assets managed for the Government Employees Pension Fund.

Like its largest client, the PIC claims in its mission statement to be a “beacon of good corporate governance”. It too “values openness” and “encourages the effective communication of relevant information”. Also like the GEPF, these proclamations of noble intent seem not to apply when push comes to shove (see Cover Story).

Although it has a manual for compliance with the Promotion of Access to Information Act, the PIC simply fails to answer questions on one of its most contentious investments. This is in Independent News & Media SA (INMSA):

  • In mid-2013 the PIC disclosed that it had bought 25% of the equity in INMSA for R500m. But is this R500m the total extent of PIC/GEPF exposure? Are there additionally, for example, sureties or loans extended to Sekunjalo and/or other members of the purchasing consortium?
  • For what reasons does the PIC consider this to be a prudential investment for a pension fund?

The first question merely invites a quantitative response. The second question is qualitative, for the response (were it forthcoming) would once and for all either substantiate or repudiate the continued inferences in the public domain of political influence in PIC decision-making.

But that’s for others to speculate relative to the central issue of prudential pension-fund investment, raising as a corollary the PIC’s mandate from the GEPF. This is because the investment, purely from the perspective of benefit to fund members, is contentious. The INMSA investment is into:

  • An unlisted vehicle, thus constraining liquidity in the shares and transparency over their performance;
  • A newspaper industry in decline.

The latter applies particularly to INMSA products (see graphs). To be fair, the industry trend is widespread for the point is underlined by circulations of other iconic titles going the same way.

As examples, between 2002 and March 2013 (when the PIC was looking to invest), average copy sales of the Sunday Times had dropped from 504 900 to 442 800 (now 385 100); Business Day from 41 900 to 33 700 (now 30 900); Rapport from 336 300 to 210 700 (now 156 400), and Beeld from 102 100 to 67 700 (now 52 300).


There are significant differences from INMSA. Times Media Group, which owns the Sunday Times and Business Day, has diversified revenue streams. Were the PIC to exit from its long-held 21,4% stake, on the possible offer from Blackstar/Tiso to buy out minorities, it could receive almost R600m in cash.

INMSA, by contrast, must battle from the narrow base of print. The blunt reality is that newspapers have only two revenue sources. They’re from copy sales and advertising. The more that copy sales fall, the more that advertising revenues reduce; the more they reduce, the dimmer the prospects for profits and dividends.


So back it goes to the PIC simply to answer the question of why it invested. Actually, it’s the question that’s simple. For the PIC, the answer might be less so.