PUBLIC INVESTMENT COMMISSIONERS

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PUBLIC INVESTMENT COMMISSIONERS ISIBAYA FUND

• Neill Maree Portfolio Manager
• Fuad Cassim Isibaya Fund Consultant

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BACKGROUND

• The PIC is not a Development Agency but acts as
  investment manager in terms of the PIC Act
• The PIC manages funds on behalf of various
  clients, including the Government Employees
  Pension Fund
• Investments have traditionally been made in
  listed securities, i.e. bonds and equities
• These investments are not of a developmental
  nature

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BACKGROUND(continued)

• The PIC has, however, also been mandated to
  invest in investments which promote social
  responsibility and infrastructure
• The Isibaya Fund has been created to house these
  investments
• The PIC may utilise up to 3,5 of the assets
  under management for Isibaya Fund Investments

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Which Investments or Asset Classes?

• Private Equity
• Privatisation
• Infrastructure
• The promotion of sustainable Black Economic
  Empowerment holds the key to the success of the
  Isibaya Fund

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What kind of returns are targetted?

• Bear in mind that the PIC acts on behalf of
  clients in a fiduciary capacity
• All transactions should be financially viable to
  qualify.
• Investments should have the potential to provide
  returns commensurate with the risks attached to
  the particular assets
• A real return of 10 is therefore targetted

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Does this mean that there is a possible conflict
between investment return and socially
responsible investments?

• No
• Some investments have a good change to provide
  higher than expected returns
• Other investments could, however, underperform
• In the long-term a well diversified portfolio of
  investments could provide both the required
  investment returns and the necessary social impact

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How does the Isibaya Fund operate in practise?

• Investment proposals are currently evaluated on a
  deal-by-deal basis
• Investment proposals are submitted for
  consideration to the PICs Investment Committee
• The Investment Committee then makes a
  recommendation to the PIC Board

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Will the PIC consider partnerships with other
market participants?

• Yes
• The PIC cannot operate in isolation in the South
  African Financial Markets as this could lead to a
  so-called paper-chase
• Possible partners include the DBSA, the NEF, the
  IDC, the South African Infrastructure Fund and
  even other pension funds
• The PIC already has sound working relationships
  with a number of other market participants

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What has the PIC achieved?

• The PIC has invested in, amongst others, the N3
  Toll Road, the N4 Bakwena Toll Road and the
  Phamine Tin Mine
• These investments have been structured to yield a
  return over the medium to longer term success
  or failure can therefore not be determined
  immediately

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Why Toll Roads?

• In the first place it meets the Isibaya Funds
  requirement to invest in infrastructure
• It creates an opportunity to finance HDI firms to
  enable ownership
• Toll Roads create jobs and HDI firms can actively
  participate in not only the construction phase,
  but also in the ongoing maintenance program

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Why Toll Roads?(continued)

• HDI firms obtain cash flows from the work which
  in turn enable them to
• Repay their financial commitments and
• Expand their business
• At the same time investment returns are created
  for the PIC

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FUTURE PLANS

• Discussions are to be held with other parties to
• Strengthen existing relationships
• Create the platform for future co-operation with
  other role-players
• The Isibaya Fund is in the process of formulating
  policies with regard to BEE Charters

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FUTURE PLANS(continued)

• BEE Charters should provide guidance to the
  market in general on investment requirements
• This may in turn lead to a revised investment
  strategy for the Isibaya Fund

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QUESTIONS