In a statement released on Thursday, Old Mutual Emerging Markets CEO Ralph Mupita said Futuregrowth Asset Management’s comments on State-owned entities do not represent the broader views of Old Mutual.
On Wednesday Futuregrowth – Old Mutual’s Fixed Income asset management boutique – said it would no longer lend money to six of South Africa’s largest State-owned companies, on concerns about their oversight and governance.
During an interview with Moneyweb’s Siki Mgabadeli on the SAfm Market Update, Futuregrowth CIO Andrew Canter said it appears as if government is at war with itself, referring to ther ecent announcement by the presidency that it would create a SOE council, headed by the president, to oversee SOEs. “It puts in question how SOEs themselves are managing their own governance and independence,” he said. To listen to the interview, or read the transcript, click here.
He added: “We cannot rationally take a five to 10-year view on their financial status and that means we cannot give new loans to them. It is not a shot across the bow. It is not a political statement. It is merely saying that there is uncertainty and in the face of uncertainty investors have to be more attentive and ask more questions, and that is what we are doing.”
Mupita said Futuregrowth has a mandate to make independent investment calls on behalf of its clients.
“We respect the independence that fund managers need to deliver investment performance for clients, and believe that a more constructive model of engagement is needed and necessary to build and increase socio-economic development and drive financial inclusion in our country. We will engage the fund manager around these issues.
“Old Mutual values the broad and deep relationships it has developed with SOEs over many years. These relationships have been key in building and increasing socio-economic development and driving financial inclusion in South Africa.
“Old Mutual believes that public-private partnerships are critical for much-needed and shared growth in South Africa and we will continue to play our part in enabling that,” said Mupita.
“Old Mutual remains committed to our existing commercial relationships and public-private partnerships with SOEs and will continue playing a constructive and value-adding role in capital markets, in both listed and unlisted investments.”
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