By Macharia Kamau

South Africa investment fund has announced placement of $250 million in a stake in Ecobank Transnational, the parent company of Ecobank Group.

Public Investment Corporation (PIC), on behalf of South Africa Government Employees Pension Fund (GEPF), said the investment will represent the PIC’s first major direct investment outside of South Africa and is in line with GEPF’s investment strategy that has identified Africa (excluding South Africa) as the next frontier for growth.

In this regard, GEPF has allocated five per cent of its one trillion rand of assets under management to be invested in the rest of the continent.

"Our continent is ripe for investment", says John Oliphant, GEPF’s head of investments and actuarial.

"With over one billion people and a rapidly growing middle class, Africa, in tandem with the rest of the developing world, presents exciting investment opportunities.

With an almost stagnant growth recorded in developed economies, Africa has strongly emerged as the next frontier for investment growth," he says.

Expansion plan

The transaction will bolster Ecobank’s tier one capital and further enhance its ability to grow its business across the African continent. The $250 million share purchase will be affected by the issuance of 3,125,000,000 shares in Ecobank representing 19.58 per cent of the total outstanding number of shares.

Following this investment, the PIC, which manages pensions and related benefits on behalf of all South African Government employees, is expected to take a seat on Ecobank board.

"We look forward to welcoming the GEPF as a shareholder. Along with our existing shareholders, we will now have a slate of highly reputable local, regional and international shareholders and our equity capital raising programme is coming to an end. Our unparalleled presence across sub-Saharan Africa and our knowledge of local markets will also facilitate the GEPF’s investment plans for Africa," said Arnold Ekpe, Ecobank Group Chief Executive Officer.

Increasing footprint

Chief Executive Officer of PIC, Elias Masilela said: "We are excited about the proposed investment in Ecobank. We believe that this is a significant step that will complement the Africa strategy of our major client, GEPF, which seeks to take advantage of private equity opportunities on the continent.

With this one investment we will be immediately optimising our footprint on the rest of the continent, an action that would otherwise require multiple investments and huge effort as well as resource allocation."

PIC is a public asset management firm wholly owned by the South African government, with the Minister of Finance as the sole shareholder representative of the government.

PIC clients are mostly public sector entities including the Government Employees Pension Fund, which contribute 90 per cent of the funds that PIC manages. Other clients include Unemployment Insurance Fund, Associated Institutions Pension Fund, Compensation Commissioner Pension Fund and Compensation Commissioner Fund.

The PIC owns shares in listed companies and currently controls over 10 per cent of the Johannesburg Securities Exchange.