Statement on Futuregrowth’s withdrawal from SOC funding (Eskom and Transnet)
As Shareholder Representative of Eskom and Transnet, the department and the State Owned Companies (SOCs) have reflected on the decision of Futuregrowth Asset Management to withdraw future investments into Eskom and Transnet and the ensuing public debate. Futuregrowth Asset Management has direct exposure of about R10-billion in Eskom and Transnet, while both have collectively raised over R470-billion from other financial institutions.
The Futuregrowth Asset Management investment is indeed important, however, as Shareholder Representative on behalf of Government and the South African State, the announced decision of Futuregrowth Asset Management was made without consulting Government, myself as the Executive Authority and Shareholder Representative of Eskom and Transnet, including both these SOCs.
We have noted Old Mutual's statement that the announcement and decision of Futuregrowth Asset Management do not represent the views of Old Mutual, thereby distancing itself from the decision of its subsidiary company. For the public record and as information to our citizens, annually the department receives four Quarterly Reports and an Annual Integrated Report that includes an unqualified and clean Audited Annual Financial Statement for the financial years.
These reports comply to the Public Finance Management Act, the Companies Act, the King III Report, the Memorandum of Incorporation, the Shareholders Compact, the Strategic Statement of intent and the established Legislation of these two entities.
All these reports demonstrate good economic and financial governance, prudent strategic and operational management, and having in place appropriate institutional structures. Capital markets and multilateral institutions continue to show confidence in Eskom and Transnet’s corporate, economic and financial governance systems, their investment decisions, as well as, these companies long term viability and sustainability.
Both Eskom and Transnet have not defaulted payment of loans and other on credit facilities. The rigour and robustness of the businesses plans of these companies have seen funds being approved from AAA rated multilateral institutions such as the African Development Bank and international funding institution, like the BRICS Bank.
We take note of the fact that Old Mutual has distanced itself from its subsidiary and the potential implications to our domestic financial markets and future investments into SOCs. Old Mutual has to date not instructed Futuregrowth Asset Management to retract both the decision and the statement.
We also note a principle position taken by the Association for Savings and Investments South Africa (ASISA) where they caution Futuregrowth Asset Management against inviting other Fund Managers to support this decision as doing so will be deemed collusive or restrictive behaviour in terms of the Competition Act.
Government is committed to engaging all affected parties as well as improving channels of communication to avoid these unfortunate actions. I have agreed to a meeting Thursday 8 September 2016 with the CEO of Old Mutual and the Chief Executive of Futuregrowth Asset Management.
Enquiries:
Colin Cruywagen
Cell: 082 377 9916
