Investec Plc (INVP)’s money manager and Sanlam Ltd. (SLM) have the most at risk in a looming bond default of at least 925 million rand ($94 million) after the liquidation of First Strut RF Ltd., a South African engineering company.
Investec Asset Management invested 435 million rand in a First Strut note through a company called Bacarac Trading 142 (Pty) Ltd., according to court documents filed in Pretoria on July 16 by Leslie Matuson and John Louw, who were appointed as business rescue practitioners. Sanlam Capital Markets purchased 263 million rand, Fairtree Capital (Pty) Ltd. took 131 million rand of the notes, Prudential Portfolio Managers bought 51 million rand, Rand Merchant Bank invested 50 million rand and Stanlib Asset Management acquired 22 million rand.
First Strut’s liquidation came after the murder of Chairman Jeff Wiggill last month in Soweto, southwest of Johannesburg. Wiggill’s shooting was a contract killing, the Johannesburg-based Star reported last week, citing the bail application of one of the men arrested for his killing. First Strut, which supplied the transport, mining and power industries, was placed in provisional liquidation on July 16.
Investec Asset Management, which manages 40 billion rand in corporate debt, said the First Strut bonds were part of a dedicated high-yield institutional credit strategy. “Clients can still expect a positive return for the year ahead,” the Cape Town-based money manager said in an e-mailed reply to questions today.
FirstRand, owner of South Africa’s second-largest banking group which includes Rand Merchant Bank, loaned the engineering company 200 million rand and invested 50 million rand in the bond, Sam Moss, investor relations director of Johannesburg-based FirstRand, said in an e-mailed response to questions today.
The money invested by Fairtree Capital “was held in several credit portfolios, has been fully provided for, and within the mandates given by the underlying investors,” Paul Crawford, a portfolio manager at the Cape Town-based company, said by phone today. “The portfolios remain ahead of their performance targets.”
First Strut has 925 million rand of floating-rate notes outstanding, which RMB sold for the company, according to data compiled by Bloomberg.
Sanlam Capital Markets, a unit of South Africa’s second-biggest insurer, Prudential Portfolio Managers and Johannesburg-based Stanlib didn’t immediately respond to telephone or e-mailed requests for comments.
Investec said last week its banking unit loaned about 240 million rand to First Strut. Investec didn’t immediately respond to e-mailed questions today.