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Why govt employees so badly hope Naspers doesn’t flop


Why govt employees so badly hope Naspers doesn’t flop

Government Employees Pension Fund, managed by the PIC, has a whopping 12.37% stake in the media giant

Ann Crotty

Abel Sithole, principal executive officer of the Government Employees Pension Fund (GEPF), gave an insightful and persuasive account of why the biggest pension fund in SA would consider investing in Eskom at a press conference recently. Critically, he did stress the investment would have to be “under the right terms and conditions”.
Sithole’s point prompts the question: how many investments are made that are not under the right terms and conditions? Surely this is a basic requirement that should be adhered to by the Public Investment Corporation (PIC, which manages most of the GEPF’s almost R2-trillion of assets.
The findings of the Mpati commission should provide some insight. They might also shed light on the declining trend in the GEPF’s funding level – that is the extent to which its assets exceed its liabilities. The level has dropped to 108% from 115% two years ago.
Fragile economic conditions and the generally sluggish JSE provide part of the explanation. For much of the past five years, the GEPF’s 12.37% stake in Naspers, which has soared to unimagined heights, has helped camouflage the extent of general weakness in the market. It has also helped counter the effect of the disturbing number of investments not made “under the right terms and conditions” that have ended up destroying billions of rands of fund value.
However, an over-reliance on Naspers, which has a market capitalisation of R1.6-trillion, creates considerable risk for the GEPF and its 1.2 million members, as well as the taxpayers who are on the line for any funding-related failure to pay out pensions.

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