FUTUREGROWTH chief investment officer Andrew
Canter moved on Thursday to calm the furore over the fund’s decision to
pull the plug on new loans to state-owned enterprises, saying he
personally apologised for his failure to engage firms directly before
going public.
Canter is, nonetheless, continuing in his bid to engage the companies on their governance arrangements and standards, including the credentials of their directors and their independence.
Futuregrowth is the biggest specialist investor in domestic fixed-income, with R150bn under management. Its announcement last Thursday, in which it cited both governance concerns and political threats to the Treasury, caused the rand to fall more than 1% and unleashed a storm of controversy.
In an interview on Thursday, Canter said: "This story has gone to places I never anticipated and has consequences that I had no inkling of.
"We are in a process now to engage with the state-owned enterprises concerned."
Canter said that once Futuregrowth had come to an investment decision that as fiduciaries of investors’ savings, it could not provide additional finance to some of the largest state-owned enterprises, it had decided to make a public announcement for the decision to be disseminated speedily.
"In the light of the fallout, we must frankly concede that a more measured approach of direct consultation with each state-owned enterprise, before contemplating public comment, would have been … fairer.
"I would like to personally apologise to each of the state-owned enterprises concerned, and their respective government ministers, for my failure to ensure a fair, one-on-one engagement," he said.
Futuregrowth is the fixed investment boutique fund of Old Mutual, which distanced itself from the action, with CE Ralph Mupita saying that the parent company would not follow suit and that "a more constructive model … was needed".
Canter said he regretted that Old Mutual had been dragged into the debate.
"The decisions were made by Futuregrowth alone, as an independent, fiduciary asset manager. It is grievous that Old Mutual has been dragged into the debate, which they neither knew about, endorsed, nor could practically control," he said.
In his first announcement, Canter named Eskom, Transnet, the South African National Roads Agency, the Land Bank, the Industrial Development Corporation and the Development Bank of Southern Africa as firms about which he had concerns.
Since last week, Futuregrowth had interacted with all of them and had either already met with board members or had plans to do so soon.
The fund also sent each firm a document with a request for information on: the nomination and appointment of board members; their CVs; and their disclosure documents. It has also requested the same information from audit committees and credit committees, in the case of loan-making institutions.
The loans that were pulled last week — two syndicated loans for about R600m, in which two banks were co-creditors and a third direct loan to another for about the same amount to three separate state-owned enterprises — remained in abeyance, Canter said.
While one foreign investor — Denmark’s Jyske Bank — said last week that it had gone underweight in Eskom bonds due to the political upheavals around the Treasury, most domestic investors canvassed said they would not be changing their stance to state-owned enterprises.
The Association for Savings and Investment in SA, the industry body for fund managers, also failed to rally behind Futuregrowth, saying that as a body, it could deliberate only over industry matters. Public Enterprises Minister Lynne Brown said earlier in the week that she intended to meet Futuregrowth to discuss its stance. However, the meeting did not take place.
Canter is, nonetheless, continuing in his bid to engage the companies on their governance arrangements and standards, including the credentials of their directors and their independence.
Futuregrowth is the biggest specialist investor in domestic fixed-income, with R150bn under management. Its announcement last Thursday, in which it cited both governance concerns and political threats to the Treasury, caused the rand to fall more than 1% and unleashed a storm of controversy.
In an interview on Thursday, Canter said: "This story has gone to places I never anticipated and has consequences that I had no inkling of.
"We are in a process now to engage with the state-owned enterprises concerned."
Canter said that once Futuregrowth had come to an investment decision that as fiduciaries of investors’ savings, it could not provide additional finance to some of the largest state-owned enterprises, it had decided to make a public announcement for the decision to be disseminated speedily.
"In the light of the fallout, we must frankly concede that a more measured approach of direct consultation with each state-owned enterprise, before contemplating public comment, would have been … fairer.
"I would like to personally apologise to each of the state-owned enterprises concerned, and their respective government ministers, for my failure to ensure a fair, one-on-one engagement," he said.
Futuregrowth is the fixed investment boutique fund of Old Mutual, which distanced itself from the action, with CE Ralph Mupita saying that the parent company would not follow suit and that "a more constructive model … was needed".
Canter said he regretted that Old Mutual had been dragged into the debate.
"The decisions were made by Futuregrowth alone, as an independent, fiduciary asset manager. It is grievous that Old Mutual has been dragged into the debate, which they neither knew about, endorsed, nor could practically control," he said.
In his first announcement, Canter named Eskom, Transnet, the South African National Roads Agency, the Land Bank, the Industrial Development Corporation and the Development Bank of Southern Africa as firms about which he had concerns.
Since last week, Futuregrowth had interacted with all of them and had either already met with board members or had plans to do so soon.
The fund also sent each firm a document with a request for information on: the nomination and appointment of board members; their CVs; and their disclosure documents. It has also requested the same information from audit committees and credit committees, in the case of loan-making institutions.
The loans that were pulled last week — two syndicated loans for about R600m, in which two banks were co-creditors and a third direct loan to another for about the same amount to three separate state-owned enterprises — remained in abeyance, Canter said.
While one foreign investor — Denmark’s Jyske Bank — said last week that it had gone underweight in Eskom bonds due to the political upheavals around the Treasury, most domestic investors canvassed said they would not be changing their stance to state-owned enterprises.
The Association for Savings and Investment in SA, the industry body for fund managers, also failed to rally behind Futuregrowth, saying that as a body, it could deliberate only over industry matters. Public Enterprises Minister Lynne Brown said earlier in the week that she intended to meet Futuregrowth to discuss its stance. However, the meeting did not take place.
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