Steinhoff woes hit Namibia
Namibian pension funds will take a substantial hit because of the collapse of South African-based multinational giant Steinhoff.
A local expert has warned that despite minimal exposure to the Steinhoff scandal, some investment funds in Namibia will still suffer significant losses.
The CEO of Retirement Fund Solutions, Tilman Friedrich, said the losses were severe when taken on a case-by-case basis per fund.
“In the case of Steinhoff it seems the maximum exposure to this share of any investment manager was 1.5%, a relatively small exposure that most members can still absorb. When you convert such low exposures to an amount, in most instances it still represents a significant loss,” he said.
As a pension fund, Retirement Fund Solutions allocates capital to fund managers such as Namibia Asset Management, Momentum Namibia, Sanlam Namibia, OId Mutual and Allan Gray, among others, for investment purposes. Steinhoff's shares fell as much as 62% on 6 December after its CEO, Markus Jooste, resigned amid a probe of accounting irregularities. The market value of the multinational, which is based in South Africa, but listed in Germany on the Dax, has dropped to about N$282 billion following its widely reported accounting scandal. Steinhoff is a global retail holding company and owns brands which include Incredible Connection, Hifi Corp, Hertz Car Rental, Pep Stores, Dunns, Shoe City, Buco which was formerly Pennypinchers, Tekkie Town and clothing retailer Ackermanns. Explaining the possible exposure local pensioners and insurance companies had to Steinhoff, Friedrich said that there were very strict limitations for asset managers to operate in, giving them minimal scope to invest in one single company, irrespective of its size.
Some of the investment managers mandated by Retirement Fund Solutions, such as Namibia Asset Management and Momentum Namibia, had about 1.5% of their assets under management invested in Steinhoff.
Old Mutual Namibia had a 1.45% exposure through its Profile Fund, while it had a 0.8% exposure through its Best Investment View Segregated Fund. Sanlam Namibia had a 1.2% exposure through its Stable Bonus Fund, a 0.5% exposure through its Absolute Return Plus Fund, and a 0.5% exposure to its Inflation Linked Fund.
“The one consolation for pension fund managers should be the fact that prudential investment guidelines place very restrictive caps on the maximum exposure to a single investment,” Friedrich said.
According to him, asset managers invested money in various companies to lower the risk of being exposed to one single company in the event of severe losses.
“Typically pension funds spread their investment across anything between 30 and 100 companies and those are typically large companies,” he said.
With regard to physical property such as shopping malls and industrial complexes, in which pension fund money is also typically invested through companies like Oryx which owns and operates Maerua Mall, strict limitations are also imposed to manage the risk of an investment going bad.
“No pension fund may invest more than 5% of its capital in a single property. It may invest a maximum of 10% of its capital in a company which has a market capitalisation of at least N$5 billion or a maximum of 5% if the market capitalisation is less than N$5 billion,” Friedrich explained.
It is speculated that most pension funds would have had some exposure to Steinhoff since it was in the Top 40 index on the Johannesburg Stock Exchange (JSE).
The Government Institutions Pension Fund was unable to comment owing to the unavailability of its CEO, David Nuyoma, and its general manager for investments, Conville Britz, who were both said to be on leave when approached to give a response.
OGONE TLHAGE
The CEO of Retirement Fund Solutions, Tilman Friedrich, said the losses were severe when taken on a case-by-case basis per fund.
“In the case of Steinhoff it seems the maximum exposure to this share of any investment manager was 1.5%, a relatively small exposure that most members can still absorb. When you convert such low exposures to an amount, in most instances it still represents a significant loss,” he said.
As a pension fund, Retirement Fund Solutions allocates capital to fund managers such as Namibia Asset Management, Momentum Namibia, Sanlam Namibia, OId Mutual and Allan Gray, among others, for investment purposes. Steinhoff's shares fell as much as 62% on 6 December after its CEO, Markus Jooste, resigned amid a probe of accounting irregularities. The market value of the multinational, which is based in South Africa, but listed in Germany on the Dax, has dropped to about N$282 billion following its widely reported accounting scandal. Steinhoff is a global retail holding company and owns brands which include Incredible Connection, Hifi Corp, Hertz Car Rental, Pep Stores, Dunns, Shoe City, Buco which was formerly Pennypinchers, Tekkie Town and clothing retailer Ackermanns. Explaining the possible exposure local pensioners and insurance companies had to Steinhoff, Friedrich said that there were very strict limitations for asset managers to operate in, giving them minimal scope to invest in one single company, irrespective of its size.
Some of the investment managers mandated by Retirement Fund Solutions, such as Namibia Asset Management and Momentum Namibia, had about 1.5% of their assets under management invested in Steinhoff.
Old Mutual Namibia had a 1.45% exposure through its Profile Fund, while it had a 0.8% exposure through its Best Investment View Segregated Fund. Sanlam Namibia had a 1.2% exposure through its Stable Bonus Fund, a 0.5% exposure through its Absolute Return Plus Fund, and a 0.5% exposure to its Inflation Linked Fund.
“The one consolation for pension fund managers should be the fact that prudential investment guidelines place very restrictive caps on the maximum exposure to a single investment,” Friedrich said.
According to him, asset managers invested money in various companies to lower the risk of being exposed to one single company in the event of severe losses.
“Typically pension funds spread their investment across anything between 30 and 100 companies and those are typically large companies,” he said.
With regard to physical property such as shopping malls and industrial complexes, in which pension fund money is also typically invested through companies like Oryx which owns and operates Maerua Mall, strict limitations are also imposed to manage the risk of an investment going bad.
“No pension fund may invest more than 5% of its capital in a single property. It may invest a maximum of 10% of its capital in a company which has a market capitalisation of at least N$5 billion or a maximum of 5% if the market capitalisation is less than N$5 billion,” Friedrich explained.
It is speculated that most pension funds would have had some exposure to Steinhoff since it was in the Top 40 index on the Johannesburg Stock Exchange (JSE).
The Government Institutions Pension Fund was unable to comment owing to the unavailability of its CEO, David Nuyoma, and its general manager for investments, Conville Britz, who were both said to be on leave when approached to give a response.
OGONE TLHAGE
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