IDC and PIC sign MoU to explore investment opportunities

The Industrial Development Corporation (IDC) and the Public Investment Corporation (PIC) have signed a Memorandum of Understanding (MoU) whose main objective is to establish a broad framework within which these institutions can collaborate, co-develop and co-invest in projects and exchange investment including other information.

The IDC, which is the largest development finance institution in southern Africa, and the PIC, an institution which manages a diversified investment portfolio comprising of multiple asset classes, have had a similar arrangement (MoU) which was signed in December 2012 but expired in December 2017.

The results of that partnership culminated in the conclusion of the PIC Green Bond (GEPF) and the UIF Fund 2. Currently, the parties are in discussions to establish UIF Fund 3. Similar to the UIF Fund 2, the proposed fund will fund job-rich projects (job-creation and job-saving) within the South African economy in the sectors supported by the IDC and PIC.

The proposed MoU will build on the above achievements towards greater traction and co-development, cooperation and co-investments in projects, based on measurable and beneficial outcomes for both entities. With over R3.5 trillion in assets under management, the PIC is one of the largest asset managers in Africa.

IDC CEO MmakgoshiLekhethe said, “We are proud to renew this partnership with the PIC, an institution whose objectives align with our mandate. Both the IDC and PIC have contributed tremendously to South Africa’s socio-economic growth and transformation imperatives. Our past collaborations helped the IDC to significantly invest in renewable energy projects among others and also to create and save jobs through the UIF Fund. Today, we can proudly state that the IDC helped to de-risk this sector.” 

Since venturing into this space in 2012, its exposure to this sector has grown remarkably and currently stands north of R16.2 billion. To date, investments in renewable energy, notably in Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) Round 1 and 2 have helped add 900MW of power to the national grid in the process creating about 8 195 jobs spread across the country.

PIC has supported energy projects with over 2 300MW of capacity, including 2100MW from renewables across technologies Wind, Photovoltaic, Concentrated Solar Power and hydro. Green bonds accounts for more than 50% of PIC’s clean energy investments.

Patrick Dlamini, PIC CEO, said “We believe that this partnership is of mutual benefit to both the PIC and the IDC, who are at the forefront of investing towards development of South Africa and the African continent. Through this partnership, we aim to continue efforts of reindustrialising the SA economy and catalyse new and emerging industries such as green hydrogen; critical minerals; electric vehicles value chain and infrastructure; advanced manufacturing; e-commerce; and high-value agriculture and agro-processing. Furthermore, we, jointly, seek to support Africa’s interregional trade and integration. The signing of this MoU also aligns with our recently published paper, titled “Re-industrialising South Africa: Can Institutional Capital Spark SA’s Next Industrial Boom.”

Among other objectives, the MoU further seeks to facilitate and ensure effective utilisation of the two parties’ resources and expertise to build a collaborative relationship which will promote growth of their portfolios and enhance socio-economic development and change in South Africa and the rest of Africa.

BUSINESS REPORT