The Public Investment Corporation (PIC) has outlined its vision for its recently launched R2-billion fund aimed at early-stage tech-driven companies.
PIC executive head of research Sholto Dolamo told a Frost & Sullivan CEO Think Tank, in Cape Town, that the PIC was venturing beyond its traditional investments on the JSE. It aims to invest in unlisted companies through its new fund.
“We are trying to facilitate the businesses of the future. We’re looking for smart ideas especially in the innovation and tech space.”
Dolamo said the PIC and the Unemployment Insurance Fund (UIF) had partnered to create early-stage companies for maximum economic impact and were looking at tech-empowered individuals and companies.
“We see great growth in this going forward. From a research perspective, we’re looking at mega global trends. We are trying to identify which companies are best positioned to take advantage of trends in specific sectors.”
The PIC is interested in supporting unlisted investment funds focused on unlisted impact investment strategies in sectors ranging from agribusiness to manufacturing and mining.
Dolamo said there had been some “amazing” products and interesting innovations generated in South Africa, but that funding had been difficult. The new initiative would open up opportunities for these to come to fruition. The R2-billion fund will also look at companies that need some capital to get to the commercial stage.
“Universities, entrepreneurs and various government departments are playing their part in driving innovation across various sectors of the economy. Closing the gap is clearly necessary.”
Dolamo said there had been a significant slowdown in inventions in South Africa since the 1970s, while research and development had declined significantly.
“No wonder we have problems with growth in our economy. We have been in a bit of a low-growth lull for some time.”
In a bid to stimulate growth, the PIC and the UIF are looking for a pipeline of companies to fund. It considers these as “companies of the future”.
“It’s only R2-billion, but if we do it right, there are opportunities to leverage off other funders and to grow,” Dolamo told executives from around 20 companies.
It is interested in investing in themes such as food security, biosciences and ag-tech.
In mining, beneficiation and energy and related sectors, the PIC is looking into investments in themes such as mechanisation, steelmaking materials, fuel cells, commodities, off-grid energy supply, gas-related generation and renewable energy.
In the water, waste and related services arena, it is considering investments which would provide solutions related to water access and quality, waste management and recycling. On the manufacturing and information and communications technology side, it is homing in on themes such as the Fourth Industrial Revolution, additive manufacturing and fuel cells.
“We would like to be a leader in impactful investing in the future. We would like to exceed client returns while investing for sustainable growth and transformation.
“We are trying to use the developmental drivers to venture into much earlier stage companies,” explained Dolamo.
An important part of the vision for the R2-billion fund is to create a new set of transformed fund managers.
By setting up sector-specific funds, with new fund managers, it would help black economic empowerment (BEE).
“This will create new transformed fund managers in an industry where only 24% of the players have a BEE score better than Level 4 and where the majority of professionals are white,” said Dolamo.
The PIC manages R2-trillion, 80% of it on the JSE. Dolamo said 5% was allocated for the rest of the continent, while the global market accounted for another 5%.
The PIC has partnered with global business consulting firm, Frost & Sullivan, for its 2018 GIL African Awards and CEO Think Tank.