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PIC owns 30% of Harith, but ‘is not involved’ in 51% SAA acquisition

Spotlight on Harith General Partners, the main black empowerment component of the Takatso Consortium, which is set to take a majority stake in the national airline.
Image: Shutterstock

The Public Investment Corporation (PIC) on Monday confirmed that it owns a 30% stake in Harith General Partners, one of the partners in the Takatso Consortium that is set to acquire a 51% stake in South African Airways (SAA). However, the PIC stressed in a statement that it is not involved in the acquisition.

This follows concerns raised by the Democratic Alliance (DA) and aviation industry insiders about the possible involvement of Africa’s largest pension fund manager and ANC aligned individuals in the planned 51% sale of SAA.

“The PIC has noted media reports and comments by some public figures insinuating that PIC funds will be used for the acquisition of a 51% stake in the SAA … The PIC is not involved in this acquisition, nor are the assets that it manages on behalf of clients,” it said in a statement.

Read:

Government sells majority of SAA to private entities

Economic recovery: SAA and power generation decisions show government is serious

“However, the PIC owns 30% of Harith General Partners and some of the individuals involved in Takatso Consortium may previously have been associated with the PIC. Nonetheless, Harith General Partners and the Takatso Consortium did not involve the PIC in any way in this acquisition,” it added.

“Whilst it is a fact that the PIC has shares in Harith General Partners, it must be stated that the PIC is not a member of Takatso Consortium, which we understand is a special vehicle established by Harith General Partners and Global Airways,” the pension fund manager clarified.

DA MP and member of the Standing Committee on Public Accounts (Scopa) Alf Lees issued a statement on Friday saying there were a “plethora of concerns surrounding the deal”.

His comments came in the wake of Public Enterprises Minister Pravin Gordhan revealing earlier on Friday morning the Takatso Consortium as the new strategic equity partner for SAA.

“The consortium consists of Harith General partners, an African infrastructure and airports investor with strong links to the ANC and the PIC, and Global Airways,” Lees pointed out.

He said it was a “major concern” that the board of Harith General Partners is chaired by Jabu Moloketi, who also chaired the PIC and was deputy Finance Minister when Harith was granted R17 million in seed funding back in 2006.

“It is noteworthy that, whenever the ANC engages in public-private partnerships, it is almost always ANC bigwigs that benefit most,” added Lees.

Meanwhile, the DA raised other concerns.

“The DA is also deeply concerned by government’s confirmation that the consortium is still to undertake a normal due diligence exercise before the definitive sale and purchase agreement is completed,” Lees said.

Read: SAA can operate for 12-36 months with R3bn investment – consortium

“This is worrying in light of the fact that Minister Gordhan seems confident that the consortium will provide R3 billion in capital for the “revitalised” SAA. Clarity is needed as to what will happen should the consortium not go through with the purchase of the majority-shareholding in SAA,” he noted.

“Minister Gordhan has, after all, promised that the new SAA will be independent from the fiscus and thus taxpayers, so it is crucial that this promise be fulfilled lest even more taxpayer money is required for SAA in future.

“Government is still responsible for the historic liabilities of SAA and requires R14 billion in this regard, R10 billion of which will come from the Special Appropriations Bill currently in front of Parliament,” he explained.

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“However, the PIC stressed in a statement that it is not involved in the acquisition.”

Right.

They only 30% involved, all lies, deceit and cookery!

Someone should investigate the directors of Harith, the underlying investment and the involvement in state investments/money flow. Jabu Moleketi, Tsepho Maholele , lebashe group , aluwani capital, and numerous dodgy deals shud be exposed.

@Alap And pray do tell who will that “someone” be to carry out the investigation? The DA? Please

This is yet another incident that will play out in the circus called Zondo Commission in a year or two.

I have yet to see anything the ANC lay their hands on work to the benefit of the country

How can a ruling party run a country and Govern when their own party is bankrupt and in shambles..?

They’re making hay whilst the sun shines at our, the tax payers expense

It’s a crying shame and i wish we had a party with big cojones to “investigate” everything..

The Zondo Commission is a smoke screen and R1 Billion layer, nothing more than another useless Parastatal

@seve….if we crowd fund a few bruisers with baseball bats, the addresses or these companies are publicly available:)

But we do have a 30% stake in this company lol………

The circle of love…passing the buck to the pensioners. At least (for now) it is just the public pensioners.

There’s only 1 entity that will invest in SAA…The SA taxpayer…
Place as many layers of obfuscation as you like the bill will always always be picked up by citizenry.

Nothing has been signed yet. No money have changed hands. This ‘deal’ is typical Gordan clutching at straws.
Is Takatso ‘taking’a majority stake or are they buying a stake?
For how much?

You raise a very valid point. Why is nobody telling us exactly what that 51% was sold for. Certainly there must be a contract and the price of the sale must form part of that contract. Can someone perhaps find that contract and tell us.

Apparently not, I understand (from other reports) that the price will only be determined once the due diligence (which is ‘under way’ only now – seriously ?) is completed. So I’m also not clear what the 3bn actually is, or what happens if it’s not enough to get SAA 2.0 off the ground.

The ever present and ubiquitous State Assets value of R1…….

So it will now become an asset of the insolvent ANC via the PIC considering their usual tender based “donors” have dried up. So why not just apply Expropriation Without Any Need for Compensation.

From what I hear they got it for free on condition they come up with 3 billion to invest into there new business……. The big question is where they getting the investment capital from??? The Pic says they not involved with this new company… But then u look closer and see the Pic has a 30% stake in said company…… Now would the Pic ever lie…

Don’t you know this is part of the plan? Loot and run it into the ground, burdened with Debt.. then it looks like they’re doing us a favour by ‘offloading’ this problematic entity onto the private sector. We’re supposed to say ‘thank you’ to Takatso for taking it, not ask them how much they paid for it..

And who is “Takatso”? Directors, capital input, salaries …. we want to know. Not when the next Zondo Commission convenes.

Sounds like one big mess already – too many investors involved. When profits are realized they will claim their due. However, when losses start mounting the blaming and finger pointing is sure to begin with anyone but them having to pay up. And they want to list on the JSE??? Give us a break.

Just leave the PIC alone.
If they want to cause their members to become destitute it is the governments problem and their members thoroughly deserve a dismal outcome !!!!

problem is… Tax payer will bail out this destitute lot

Won’t be any left though !!

Actually the GEPF is a defined benefit fund with government as the employer which means the taxpayer will pay the price if the fund is badly managed.

Nevertheless from a real case study, GEPF members should take the lumpsum on retirement and invest correctly. They will get a better pension than what the GEPF will provide.

Casper1, problem is the GEPF is mainly defined benefit so any shortfall will be made up by us (nearly extinct) taxpayers! So there is really nothing for them to worry about yet as we are seemingly a bottomless pit of money to be tapped by the government at will. That is until they find the pit empty soon. Hello IMF!

Concur !

If they change article 25 of the constitution, you can kiss an IMF loan goodbye.. then it’s

“Hello Zimbabwe”

Guaranteed to be another “no value add deal”, and us taxpayers must just stay greased up and bent over waiting for the same old outcome while watching the most expensive luxury cars drive passed us, with the occupants dressed to the nine’s, dripping fancy jewelry, on our dime!!

Another FAIL, whichever way they dress it up!!

I wonder how Pravin feels about this?

Pravin while SARS commissioner vowed to get every cent from the Tax Payer.

Pravin, can you not see every cent being wasted in this transaction?
How does a BEE entity help? Ultimately the tax payer is paying for this…. and help a few in this BEE structure benefit? What are they risking in this transaction?

@Pravin Gordhan … this is surely not Economics…but please lets hear your thinking?

Pravin Gordhan is a communist, not an economist.
Pravin Gordhan was a good SARS commissioner because taking money from the people is a communist function.
He was a terrible minister of finance. He inherited a healthy, growing economy from Trevor Manuel and screwed it up. Under his watch the debt started spiralling out of control. He is a wrecking ball as public enterprises minister because, again, his communist ideologies makes for disastrous decisions for the ever shrinking tax base. The longer this wrecking ball is allowed to swing freely the longer it will take for SA to recover from his reign of terror.

Correction

The ANC is a “wrecking ball”

Gordhan is a mere puppet, and a lame one at that

I used to be naive enough to think Pravin understood economics. Now i see he only understand commienomics

Hi’s “connect the dots” speech” was instrumental in beginning to turn the tide against corruption. We should also give him credit for that. But in any logic and fore-thinking mind, that should be the extend of his involvement. If Pravin Gordhan REALLY want to serve HIS PEOPLE…. he should focus his time on cooperating with law enforcement agencies to spill the beans… so to speak.
This is really his only worth at this stage.

SAA has been privatised – NOT!

So basically pensioners have funded the bailout. Pravin and co need to hang their head in shame.

In other words, the government owns 64% of the ‘new saa’.
No thanks, I will not fly in these coffins.

”The head cannot take in more than the seat can endure”

(Sir) Winston S. Churchill (1874-1965)

”The Takatso Consortium will own 51% of the airline and the Department of Public Enterprises 49%. The intention is to list the airline in the future as one way of addressing future funding requirements and to enable all South Africans to take part in its success.
A due diligence exercise will now get underway.”
Harith Fund used to be part of my Corporate Portfolio, at my old shop, before I reached my ”sell by” date. I always had my work cut out to advise them with regards to the hedging of their offshore loan book etc.

I was always impressed with the approvals they obtained to proceed, and all transactions were subjected to legal, financial, environmental and technical due diligence.
Their partners included some of the largest development finance institutions and banks investing in South Africa and the rest of Africa. They mostly achieved all their ROE targets on the funds borrowed and invested in all their African ventures etc, during my spell with them.
”PIC owns 30% of Harith, but ‘is not involved’ in 51% SAA acquisition” I just cannot understand how any funds that will be borrowed, in the future for the SAA transaction, could be separated and ring-fenced, from in the future, from the PIC’s 30 % shareholding in Harrith – maybe Nasdaq 7can explain this to me?

Pravin Gordhan and his ego is going to result in all these pensioners loose out in the long run.

Maybe it’s a good thing. Maybe, after they have worked all their lives in the public sector and they are broke in their old age will they vote differently.

Yeah sure, you can fool most people all of the time but not those in the know!

As usual spaza shop economics.

No spaza shops actually have to make a profit from day one or else they go bang!!
This is just stealanomics.

So smart and sophisticated by the cadres, yet get a pothole fixed? This is some M&A shop pumping out fees, nothing more. Still born it will be

The psychology of bad decision making is rooted in confidence, based on incrementally bad behaviour without adverse outcomes.

Huh?

Basically: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.” – Thomas Sowell

Someone get the PIC a decent PR consultant. The correct answer to the question is that Harith is a fund manager. It raises money from investors. The PIC is one of many investors, the others being institutions from around the African continent. They invest for 10 years and expect a return of x% per annum failing which any fund manager will generally struggle to raise their next fund. PIC is just an LP and all LPs are treated equally. But now we doubt and starting to dig and insinuate.

Trying to do weird things like saying we’re not involved but we invest and we think its ring fenced just makes a mountain out of a mole hill.

Get a decent PR team and just state it as it is. Currently this just makes it sound worse.

No words can describe the incompetence of this ANC government! We should be ashamed!

I see a number of valid comments, some conspiracy theories and a lot of what is said makes sense.

One should also remember that HGP owns Lanseria, also PIC funded and with the state of Lanseria and lack of air traffic, this might, despite all the comments and theories, be a strategic financial decision to allocate more traffic from SAA flights via Lanseria to protect that investment.

Numsa’s gone very quiet suddenly, I though privatisation was taboo. Oh, wait…

Lots of rhetoric and people acting like they know everything.
1) PIC and not the GEPF has a shareholding in Harith. That is a massive distinction, as there is no link to GEPF, defined benefit plan etc.
2) The PIC does not obtain any funding from taxpayers
3) If Harith acquires a stake, it can be done by a typical private equity structure through a new fund, exclusive of the PIC. What the PIC are saying is they are not placing any funding in this new acquisition.
Little details, make a massive difference.

The PIC is an asset manager. 90% of the funds it manages are managed on behalf of GEPF and other public sector pension funds, most of the remaining 10% on behalf of the UIF and COIDA.

Are you seriously suggesting the PIC has a proprietary portfolio of this magnitude ?

Harith is the sole PIC investment. Once again – it is a PIC investment, which is contained per their integrated report. If the GEPF had exposure to Harith, it would be contained in their annual report.
So once again, PIC is not using GEPF funding. As an asset manager, GEPF pays PIC for their service. How the PIC uses it management fee is up to their discretion as they are not using GEPF funds.

Check the PIC annual report (page 8, group structure) – they do actually own Harith.

So basically, PIC invested GEPF money (for infrastructure – lets build our country) and picked up a cheeky share.

I love infrastructure investing.

Yes, the PIC owns a stake in Harith, whilst the GEPF is invested in one of the funds of Harith. Once again, PIC and the GEPF are not the same.
Hence, if Harith invests in SAA, it does not mean PIC or GEPF is investing. The original funds are already invested by the fund at Harith.

Yes, I see it’s listed as an associate. The size is interesting – Harith’s balance sheet is only about R500m (of which the PIC’s equity-accounted share is R150m) so in terms of raising R3bn of funding it looks to be a very junior partner in Takatso. Global Airways’s website is pretty opaque, can’t even see the size of its fleet.

Postscript : Harith is closely involved in the investment of PAIDF funds, which appear to originate from the African Development Bank.

Dear Moneyweb: please list: companies, directors, shareholdings, capital invested and the source of such.

Every one has a comment and an opinion, on this platform, on the radio, TV shows, But, very few DO SOMETHING….so, DON’T FLY SAA….walk, bike, motor, just don’t fly saa…

Look at the timing of the deal – done just before the elections.

Pravin Gordhan is scared the opposition will show up the government as the destroyer of SAA.

That’s the problem with marxists, they never see the nexus between shareholders, their capital investment and the viability of any enterprise….now they are trying to persuade the free market of their lies and obfuscation.

Grown up anc / Gordhan and do tell your “our people” that they are now shareholders in SAA…invested on their behalf of course, for their upliftment, financial benefit and economic participation!…phhht!

I do not know why sometimes people get so worked up on the blog/site.

The decision makers or wrong doers do not read this blog.

No change going to happen by anyone getting worked up except your health and well being.

The sad fact that I try very hard to integrate into my emotional lifestyle. I think are all so furious at seeing the immense wealth and potential of the country squandered by a clique of corrupt, inept comrades that it’s one way of de-stressing.

The other is a glass of good wine …

Because once the african marxists and dictators have taken your assets, they will take your life….look around Africa at your future!

And regarding whether the PIC or the GEPF are the prime funders here, how much more confident would foreign investors be if Berkshire Hathaway, BlackRock, Vanguard, Jack Ma or even Allan Gray or Naspers put the money up?

But did they? No. So back to square one – the SA taxpayer.

It’s all a bad joke. No one with any brains would touch SAA with a bargepole.

More lies and crookery

End of comments.

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