The Public Investment Corporation (PIC) Inquiry has heard of another bad investment that the PIC made into a Nigerian oil company, Erin Energy.
The PIC invested $270 million in Erin, buying a 29% stake in a company that was struggling.
Ndivhuwo Tshikhudo, PIC’s Fund Principal for Energy – who once worked for Stanlib, says Stanlib had rejected the investment as it did not have confidence in the investment case presented by Erin.
The PIC later extended a guarantee of a $100 million to the company.
The PIC Commission also heard from Tshifhango Ndadza, a Senior Market Risk analyst at the PIC, that the PIC received an investment exit offer from Independent media.
He says the proposal carried an implicit investment consideration for PIC to invest in another Sekunjalo entity, Sargamatha Technologies.
Both Sargamatha and Independent Media are linked to Dr Iqbal Surve.
Ndadza described Independent Media as an impaired investment and transferring it to another entity whose investment case they did not believe in, was difficult.
Ndadza says the conditional exit would have presented reputational risk as it would be perceived as PIC funding its own exit from Independent Media South Africa.
He says this exit would have translated into putting more money into Sargamatha.
Ndadza says he found it strange that the committee that reviewed the investment case was aware of the risk view and continued to test it for appetite.
The PIC was considering investing R3 billion in Sargamatha despite the company having been technically insolvent.
The deal was approved, but PIC never participated in the investment after the JSE pulled the plug on the Sargamatha listing, citing failure to comply with Company’s act.
Watch video below for more on the story: