The Government Institutions Pension Fund (GIPF) says it’s considering its options when it comes to securing its investment in Musa Capital Namibia following revelations its shareholder Musa Group has been placed under business rescue in South Africa following the request to write off a US$1.4 billion loan.
Actions proposed by the fund include requesting a change of name for the unlisted investment manager and removal of any directors associated with any wrongdoings at Musa Group level.
Musa Capital Namibia, is 40 percent owned by Musa Capital Ltd, a business related to Musa Group, with Namibians holding a 60 percent stake.
The GIPF committed N$300 million to the Namibia Mid Cap Fund. The fund is a Bewind Trust managed by a governing board of trustees, where Musa Capital Namibia PTY LTD, is the appointed fund manager to manage and administer the portfolio investments within the Mid-Cap Fund.
“The GIPF is assessing the matter and will do the necessary to safeguard its assets. At the very least the GIPF may call for replacement of the technical partner to Musa Capital Namibia, and the removal of any directors associated with any wrongdoings at Musa Group level etc.
“Under normal course of operations, it was not found that any of the businesses pose serious risks as confirmed by independent valuations done on the businesses. None the less, further assessments are being conducted to confirm that our funds are secure and invested into sound businesses,” GIPF CEO David Nuyoma said.
The GIPF boss was quick to point out the fund with assets worth over N$118 billion had not recorded any loses through its capital commitment to Musa Capital Namibia, noting that 82 percent of the commitment had already been drawn.
“There has been no losses emanating from the Mid Cap Fund which is the Bewind Trust that holds the portfolio companies invested by Musa Capital Namibia PTY LTD. Initial due diligence is one thing, however continued operational due diligence is required periodically to ensure all is above board.
“Most importantly a well-functioning ecosystem with all role players is critical. The retirement fund industry and the Regulator are continuously looking at ways to strengthen the Unlisted Investments sector within Namibia. Implementing some of the established best practices globally will minimise risks considerably,” he said.
Nuyoma, however, said although the fund was aware of the PIC investment in Musa Group, it was not privy to its financial troubles. “The entity with financial problems is Musa Group. The GIPF was aware of the stakes of the PIC in Musa Group but not aware of the brewing troubles,” he said.
Quizzed about the financial stability of the remaining fund managers allocated funds by the GIPF, he said, “the local funds are mainly managed by investment managers with insufficient track record of having exited prior funds and or having proper backing to ensure they fund their co-investments from own capital and not from management fees.
“These are some of the short-comings where some sort of incubation assistance may be necessary to ensure proper alignment of interest; transparency; good governance; financial soundness and ultimately healthy exits from portfolio companies to ensure private equity within Namibia is a success.”
Financial sector regulator, the Namibia Financial Institutions Supervisory Authority (NAMFISA) said it was aware of the Musa Group troubles, but remained mum on steps it was taking to ensure Musa Capital Namibia remained in a sound financial position.
“Musa Capital Namibia (Pty) Ltd is registered as an unlisted investment manager in terms of Regulation 28 (3) of the Pension Funds Act, 1956 and is actively managing unlisted investments on behalf of investors. The Authority in executing its mandate continues to monitor all the activities of all registered entities proactively through on and off-site supervision.
“Therefore, any non-compliance matters picked up during the on-going supervision process are addressed in line with the regulatory and supervisory framework. To that end, NAMFISA is constrained by provisions of the NAMFISA Act, 2001 (Act no 3 of 2001) to divulge information in relation to any regulated entity,” NAMFISA Manager: Corporate Communications Victoria Muranda said.
The Musa Group also has stakes in Musa Retail Financial Services; Skyward Group; Africa Frontier Holdings; Musa Capital Advisors and Musa Capital Fund Managers SA PTY LTD.