(Reuters) - South Africa’s Treasury is pressuring government pension fund Public Investment Corp (PIC) to provide as much as 100 billion rand ($7.6 billion) to fund struggling state companies, Bloomberg News reported on Friday.
The Treasury has asked the PIC, Africa's biggest pension fund, to buy its stake worth 12 billion rand in landline provider Telkom (TKGJ.J) to fund a bailout of state airline South African Airways, Bloomberg reported, citing people familiar with the matter. (bloom.bg/2waLlHm)
PIC Chief Executive Daniel Matjila has rejected the Treasury’s request, saying a purchase of the 39 percent interest would leave the company over-exposed to Telkom, the Bloomberg report said.
But Matjila was willing to buy about 2 billion rand worth of Telkom shares, which would boost the PIC’s stake to about 18 percent, the report added. The PIC currently holds an 11.4 percent stake in Telkom.
The government is also seeking funds for state-owned power utility Eskom Holdings, oil company PetroSA and aerospace company Denel, according to Bloomberg.
“The PIC has had discussions with the National Treasury regarding Telkom shares”, Deon Botha, Head of Corporate Affairs at PIC told Reuters, adding that the pension fund would not be pushed into making an investment decision.
Trade union federation Fedusa told Reuters on Friday that its public sector affiliate was considering pulling the pensions of its more than 230,000 members from the PIC over recent reports of a management change and a raid on pensions funds to prop-up state firms.
The Treasury last week refuted a newspaper report that it was about to fire the head of the PIC, calling the report “baseless.”
Reuters could not immediately reach the Treasury for comment.
Reporting by Ishita Chigilli Palli in Bengaluru; Editing by Sai Sachin Ravikumar