#PICInquiry: Seed capital loan fully repaid to PIC

Assistant commissioner Gill Marcus, left, chairperson Justice Lex Mpati and assistant commissioner Emmanuel Lediga during the PIC Commission of Inquiry being held at Sammy Marks Square, Pretoria. Photo: Thobile Mathonsi/African News Agency (ANA)

PRETORIA – Director of Harish and Lebashe Tshepo Mahloele said on Tuesday that the seed capital loan of about R22 million from the Public Investment Corporation had been fully repaid, with interest. 

Mahloele, who was testifying before the Judge Lex Mpati-led PIC Commission of Inquiry, said nevertheless, the PIC retained its 46 percent stake to this day without at any time being exposed to any risk on its own account. 

He said the PIC obtained this substantial stake in Harith Fund Managers (HFM), the largest single shareholding, since it had provided the seed capital loan in an amount calculated at just less than R22m, excluding interest, as the initiator of the concept, it had a material interest in the overall success of the Pan-African Infrastructure Development Fund (PAIDF). 

“Far from our ‘fleecing’ or ‘Iooting’ the PIC, as Mr (Bantu) Holomisa has irrationally alleged, the PIC has benefitted and continues to benefit by way of its large equity stake in HFM,” said Mahloele. 

Mahloele also submitted to the commission that the investors also envisaged that a portion of the fund managing company would belong to management for purposes of incentivisation through an employees’ equity trust. 

In accordance with the compromise with the PIC, therefore, the shareholders of HFM were: 

  1. the PIC, as to 46 percent; 
  2. an investor, Old Mutual Life Assurance, as to 12 percent; 
  3. another investor, Absa Trading and Investment Solutions, as to 12 percent; and 
  4. the Harith Share Incentive Scheme Trust (HSIST), as to 30 percent. 

Mahloele said the HSIST permitted the employees of HFM to participate indirectly in an equity share of the company, thereby incentivising them over and above their salary entitlements. 

“It is a precondition in the industry that highly skilled employees, who are necessary to administer and manage the funds under their control, be offered such an equity share. These employees, however, receive no equity benefit unless and until the clients for whom they are managing and investing funds have been fully paid out,” he said. 


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