1. Public Investment Commissioners PUBLIC INVESTMENT COMMISSIONERS’ ISIBAYA FUND Neill Maree: Portfolio Manager Fuad Cassim: Isibaya Fund Consultant

2. Public Investment Commissioners BACKGROUND The PIC is not a Development Agency but acts as investment manager in terms of the PIC Act The PIC manages funds on behalf of various clients, including the Government Employees Pension Fund Investments have traditionally been made in listed securities, i.e. bonds and equities These investments are not of a developmental nature

3. Public Investment Commissioners BACKGROUND (continued) The PIC has, however, also been mandated to invest in “investments which promote social responsibility and infrastructure” The Isibaya Fund has been created to house these investments The PIC may utilise up to 3,5% of the assets under management for Isibaya Fund Investments

4. Public Investment Commissioners Which Investments or Asset Classes? Private Equity Privatisation Infrastructure The promotion of sustainable Black Economic Empowerment holds the key to the success of the Isibaya Fund

5. Public Investment Commissioners What kind of returns are targetted? Bear in mind that the PIC acts on behalf of clients in a fiduciary capacity All transactions should be financially viable to qualify. Investments should have the potential to provide returns commensurate with the risks attached to the particular assets A real return of 10% is therefore targetted

6. Public Investment Commissioners Does this mean that there is a possible conflict between investment return and socially responsible investments? No Some investments have a good change to provide higher than expected returns Other investments could, however, underperform In the long-term a well diversified portfolio of investments could provide both the required investment returns and the necessary social impact

7. Public Investment Commissioners How does the Isibaya Fund operate in practise? Investment proposals are currently evaluated on a deal-by-deal basis Investment proposals are submitted for consideration to the PIC’s Investment Committee The Investment Committee then makes a recommendation to the PIC Board

8. Public Investment Commissioners Will the PIC consider partnerships with other market participants? Yes The PIC cannot operate in isolation in the South African Financial Markets as this could lead to a so-called “paper-chase” Possible partners include the DBSA, the NEF, the IDC, the South African Infrastructure Fund and even other pension funds The PIC already has sound working relationships with a number of other market participants

9. Public Investment Commissioners What has the PIC achieved? The PIC has invested in, amongst others, the N3 Toll Road, the N4 Bakwena Toll Road and the Phamine Tin Mine These investments have been structured to yield a return over the medium to longer term – success or failure can therefore not be determined immediately

10. Public Investment Commissioners Why Toll Roads? In the first place it meets the Isibaya Fund’s requirement to invest in infrastructure It creates an opportunity to finance HDI firms to enable ownership Toll Roads create jobs and HDI firms can actively participate in not only the construction phase, but also in the ongoing maintenance program

11. Public Investment Commissioners Why Toll Roads? (continued) HDI firms obtain cash flows from the work which in turn enable them to  Repay their financial commitments; and  Expand their business At the same time investment returns are created for the PIC

12. Public Investment Commissioners FUTURE PLANS Discussions are to be held with other parties to:  Strengthen existing relationships  Create the platform for future co-operation with other role-players The Isibaya Fund is in the process of formulating policies with regard to BEE Charters

13. Public Investment Commissioners FUTURE PLANS (continued) BEE Charters should provide guidance to the market in general on investment requirements This may in turn lead to a revised investment strategy for the Isibaya Fund

14. Public Investment Commissioners QUESTIONS