Africa’s Top Fund Manager Appoints First CEO in 18 Months

JOHANNESBURG (Capital Markets in Africa) — South Africa’s Public Investment Corp. appointed Abel Sitholeas its chief executive officer, filling a post vacated 18 months ago by his predecessor over accusations of questionable investment decisions.

The appointment comes two months after a judicial inquiry found senior management flouted internal procedures and recommended sweeping changes to laws that govern the PIC.

President Cyril Ramaphosa ordered the investigation in October 2018, one of a handful he’s instituted to probe alleged corruption since taking office after former President Jacob Zuma’s scandal-marred nine-year rule.

Sithole, 57, is the principal executive officer of the Government Employees Pension Fund, or GEPF, the commissioner of the Financial Sector Conduct Authority and a member of the Institute of Directors in Southern Africa. He’ll hold the PIC post for five years, Finance Minister Tito Mboweni said in an emailed statement on Wednesday.

The PIC manages about 2.13 trillion rand ($122 billion), more than any other fund manager in Africa. About 87% of the PIC’s funds under management belong to the GEPF, which houses the pensions of over 1 million South African state employees.

In his position as head of the GEPF, Sithole said in December the fund was considering investing more of its funds in fixed-income and unlisted assets, to offset of a possible downgrade in South Africa’s credit rating. Moody’s Investors Service in March became the last major rating company to downgrade South Africa’s debt to junk.

The PIC has had two consecutive acting heads since former CEO Daniel Matjilastepped down in November 2018. Matjila has said he plans to clear his name.

Sithole’s exact starting date is being negotiated with the GEPF and he will be part of the PIC team that is fast-tracking other executive appointments that have been vacant for months, the PIC said in a statement

The process to appoint a new CEO has taken longer than the fund anticipated. Reuel Khoza, the PIC’s first non-government affiliated chairman, said in July a new CEO should be named in three to six months. The post, advertised in November, attracted more than 200 candidates. Sithole emerged from a shortlist of six, Khoza said on Wednesday.

“Given that it wasn’t just merely a question of succession, it also included the necessity to do some clean-up, the necessity to do some mending, the necessity to restore morale and to clarify the PIC’s sense of destiny, we gave the search a deep and thorough look,” he said by phone. Sithole “understands governance inside and out and he is phenomenal with numbers, one of the best mathematicians in the country.”

While the money manager was long heralded for delivering market-beating returns, Sithole will have to repair its reputation and may also face pressure from the government to help state-owned companies in financial distress. In December, Sithole said the GEPF had increased scrutiny of the PIC to ensure it has an “adequate line of sight in those areas where there has been concern over what has been done in the past.”

“We wish him well in leading the organization and in restoring its integrity,” Mboweni said in the statement.

Source: Bloomberg Business News