SA asset manager halts lending to state firms over political uncertainty
Futuregrowth said it was concerned by ‘a power struggle going on between factions or departments’ in govt.
JOHANNESBURG - South African fixed-income asset manager Futuregrowth has halted lending to six state-owned firms citing political uncertainty in Africa's most industrialised country where the finance minister is under investigation.
Futuregrowth, which manages client assets of around R170 billion, said it was concerned by "a power struggle going on between factions or departments" in government.
South Africa's government has been rocked by a police investigation of Finance Minister Pravin Gordhan over a suspected surveillance unit set up when he ran the tax service. The turmoil has weakened South African assets.
The row deepened on Monday when the Treasury accused executives at power firm Eskom of blocking the probe of coal contracts between the utility and a company linked to the wealthy Gupta family that is accused of holding undue political sway over President Jacob Zuma.
Futuregrowth's Chief Investment Officer Andrew Canter did not name the six state-owned firms involved but said the asset manager will immediately halt the lending of more than R1.8 billion to three unnamed state owned companies.
"There were three or four loans in negotiation with three different entities and we have informed them that we're pulling those back now, we won't be making those loans," Canter told Reuters.
"We just said we can't defend ourselves to our clients three years from now why we made additional loans now. So we felt that the right thing to do was to suspend it," he said.
The rand fell 1.1 percent to the dollar, hurt partly in response to the news of the halt to lending by Futuregrowth, traders said.