New Model: Unlisted Investments - GEPF - Home Model: Unlisted Investments ... Deal presentation to...
Transcript of New Model: Unlisted Investments - GEPF - Home Model: Unlisted Investments ... Deal presentation to...
New Model:
Unlisted Investments
Elias Masilela
CEO: Public Investment Corporation
Media launch: 4 December 2012
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Presentation Agenda
1. Background
Portfolio growth & asset allocation
2. Unlisted investments & the new model
Developmental investment policy
Fund Investment Panel (FIPs)
Investment process
3. Implementation: next steps
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Background
Initially in apartheid era, GEPF was a bond and money market only portfolio.
Gradually changed since democracy in 1994, incorporating modern investment
principles.
Diversified asset base to hold equities, property, bonds, cash and money market
instruments, offshore investments, including listed and unlisted instruments.
Recently, along with launch of GEPF’s developmental investment (“DI”) policy, unlisted
investments also seen as important vehicle through which investment should occur.
Brings both diversification to the GEPF portfolio as well as contributing to development in
SA and the African continent.
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Background
5% of overall GEPF portfolio to ultimately be invested in unlisted investments
(currently, this would be R60 billion)
Isibaya fund is the primary vehicle within the PIC that facilitates unlisted
investments
Isibaya thus far has committed about R13billion
Concept of not only financial return, but also a social return: aiding
development & promoting long-term sustainable returns across all asset
classes
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Background
GEPF asset base currently approximately R1,2 trillion; impressive growth over time.
0
200
400
600
800
1000
1200
1400
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
AUM (R billions)
AUM
Source: PIC & GEPF annual reports
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Background
GEPF AUM growth and AUM compared to GDP:
Source: PIC & GEPF annual reports
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
AUM as % of GDP
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
AUM growth rate
Growth rate
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Background
A 10% target of GFCF would have significant impact:
Source: SARB, OECD, WB, PIC
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Background
Current GEPF portfolio invested as follows:
Source: PIC
Unlisted
Investments
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External investment = 10%
Explicitly focused on developmental investing (DI)
Recognises the link between the macro-economy and asset performance
Creates a reliance on good honest partnerships
Key Features of new Mandate
Response to underlying structural imbalances
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Developmental Investments (DI) Economic
Infrastructure
Social
Infrastructure
Environmental
Sustainability
Priority Sectors
Investments &
SMMEs
Energy
Logistics Network
Water
Commuter
Transport
Liquid Fuels
Broadband,
telecoms
Affordable Housing
Healthcare
Education and
skills development
Renewable energy
Green buildings
Energy Efficiency
Recycling
Clean Technology
SMMEs
Small cap stock
Exchanges
Manufacturing
Tourism
Agro – processing
Value chain mining
BBBEE
Five Developmental Investments Funds established in line with the GEPF DI Policy.
Key focus will creating sustainable returns while ensuring developmental impact.
Key Focus :
Economic and
infrastructure
development
Key Focus:
Social development
and poverty
alleviation
Key Focus:
Clean Energy and
green economy
Key Focus:
Job creation, poverty
alleviation, and
economic growth
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Unlisted Investments Split
Developmental
Investments
5%
Private Equity
5%
Property
5%
Africa
5%
Unlisted Investments
Funding Instruments
• Senior Debt
• Subordinated Debt
• Mezzanine
• Quasi-equity
• Pref shares
• Ordinary Equity
Funding Instruments
• Senior Debt
• Subordinated Debt
• Mezzanine
• Quasi-equity
• Pref shares
• Ordinary Equity
• Venture capital
Funding Instruments
• Senior Debt
• Subordinated Debt
• Mezzanine
• Quasi-equity
• Pref shares
• Ordinary Equity
Funding
Instruments
• Private
Equity
• Properties
• DI
• Listed Equity
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Fund Investment Panels (FIPs)
Fund Investment Panels (FIPS)
PropertiesEconomic
Infrastructure
Priority Sector &
SMMEs
Private Equity
and Africa
Investments
Social
Infrastructure &
Environmental
Members
· PIC Non- Exec
(Chairman)
· Industry Experts
· PIC CEO
· PIC CIO
· PIC - GM properties
· GEPF – Principal
Officer
· GEPF - Head of
Actuarial &
Investments
· GEPF - Investments
Manager
Members
· PIC Non- Exec
(Chairman)
· Industry Experts
· PIC CEO
· PIC CIO
· PIC – Fund Principal
· GEPF – Principal
Officer
· GEPF - Head of
Actuarial &
Investments
· GEPF - Investments
Manager
· Members
· PIC Non- Exec
(Chairman)
· Industry Experts
· PIC CEO
· PIC CIO
· PIC – Fund
Principal
· GEPF – Principal
Officer
· GEPF - Head of
Actuarial &
Investments
· GEPF -
Investments
Manager
· Members
· PIC Non- Exec
(Chairman)
· Industry Experts
· PIC CEO
· PIC CIO
· PIC – Fund
Principal
·
· GEPF – Principal
Officer
· GEPF - Head of
Actuarial &
Investments
· GEPF -
Investments
Manager
Members
· PIC Non- Exec
(Chairman)
· Industry Experts
· PIC CEO
· PIC CIO
· PIC – Fund
Principal
· GEPF – Principal
Officer
· GEPF - Head of
Actuarial &
Investments
· GEPF -
Investments
Manager
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Pipeline/
origination Due Diligence Deal structuring
and decision
Screening and
initial Deal
structuring
Implementation and
monitoring
• Proactive
origination and
development of
projects
• Deal sourcing
• Walk in
opportunities
• Co -investments
Detailed due-diligence of
opportunities:
• Development outcomes
• Feasibility and potential
value creation plan and
returns
• Technical viability and
competitiveness
• Financial viability
• Management
• Legal
• Environmental impact
• assessing development
impact and
sustainability
• Etc.
Ongoing monitoring of client
performance after funding is
disbursed
Interventions in businesses
experiencing difficulties
• Business support
• Restructuring
• Etc.
Legal agreements
Meeting conditions
Disbursement
Basic assessment
• Fit to mandate
• High-level risk
analysis
• Preliminary ESG
assessment
Type of funding
assessment (snr
debt, Jnr debt, Mezz,
PIK note, Pref shares,
Ord shares,), quasi
Equity etc
Credit risk analysis
Pricing and
structuring
Stress testing of the
structure
Deal presentation to
relevant committees
and approvals
Investment process (high level)
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Next Steps
Finalising Private Placement Memorandums (PPMs)
Finalising the appointment of experts to sit on FIPs
We have progressed well towards the implementation of the model and we
target to have the first sitting of FIPS by end first quarter 2013.
Monitor impact of investments going forward, not only the investments
themselves
Information will be made available for potential partners on website
Implementation expected to commence in first quarter 2013
Conclusion