Government employees set for R544 million Investec payday

Government employees, through the Public Investment Corporation (PIC), will receive R544 million from Investec when the bank pays its annual dividend. 

The PIC is the largest asset manager in South Africa, controlling around 10% of the JSE’s entire listed market capitalisation. 

Established in 1911 as the Public Debt Commissioners, the PIC is wholly owned by the government. 

Its clients are most public sector entities, including the Government Employees Pension Fund (GEPF) and the Unemployment Insurance Fund (UIF). 

The GEPF is by far the largest of these, making up over R2 trillion of the PIC’s total assets under management. 

This exposes government employees to some of the largest companies on the JSE and the world, holding significant stakes in businesses from Standard Bank to MTN to Naspers. 

However, the PIC is mandated to generate returns for its clients, drive economic development, and further the government’s transformation goals. 

The government has regularly called on the PIC to allocate its capital along the lines of race and gender, particularly within the country’s sophisticated financial services sector. 

An investor with the sheer scale of the PIC can be pivotal in this regard, exerting significant influence at the board level as it is among many of its investee companies’ largest shareholders. 

Investec payday

One such case where the PIC is the largest shareholder of a company is Investec, with the government entity being the largest investor in both Investec plc and Investec Ltd. 

Investec is the holding company for the majority of the group’s non-Southern African operations and Investec Ltd. is the holding company for the majority of the group’s Southern African operations. 

Investec operates as a single unified economic enterprise.

The banking group produced strong results for its 2024 financial year, which ended on 31 March 2024. 

Its revenue grew to £2.09 billion (R49 billion), and headline earnings per share increased by 22.7% in rand terms to 72.9 pence (R17.16). 

This resulted in the company increasing its dividend by 28% to R4.44 per share—a massive boon to shareholders, including the PIC. 

The PIC is unique in being a major shareholder of Investec plc and Investec Ltd, holding 13.6% and 15.5% of their listed equity, respectively. 

Holding shares in Investec plc is attractive for a South African asset manager as the shares can be bought on the JSE while the company earns all of its cash outside of the country, providing an effective hedge against a weak rand and a stagnant economy. 

In total, the PIC holds 140,335,625 shares in Investec across the two listed entities. This means the asset manager will receive R622.5 million in dividends from the company. 

After applying the 20% dividend withholding tax, the PIC should receive R544.3 million when the dividend is paid in just over a month.