Dr. Dan Leads $139 Billion Fund in Weak South Africa EconomyFranz Wild and Janice Kew
Dan Matjila has a tall order as the new head of the $139 billion Public Investment Corp.: raise South African state-worker pensions, kick-start flagging economic growth, revive investor confidence, and heed government demands.
In a career ranging from math professor to the Pretoria-based PIC’s chief investment officer, Matjila, 52, has won his peers’ respect as someone who can handle the pressure of the big-time and reduce the state-owned company’s multifarious challenges into simple ideas.
“There’s a whole plethora of stakeholders,” Royal Bafokeng Holdings Ltd. Chief Executive Officer Albertinah Kekana, who worked with Matjila at the PIC, said in an interview last month. “I think he has a very good appreciation. Running a fund of 1.6 trillion rand ($139 billion) is not an easy task. There’s so much complexity. If you have it in your personality to remain calm and relaxed in a very demanding role, it’s a very helpful thing.”
South Africa’s cabinet yesterday promoted Matjila to chief executive officer with immediate effect. Battered by months of strikes, ratings downgrades and a persistent jobless rate of about 25 percent, Africa’s second-biggest economy is projected to post the lowest growth since a 2009 recession. The benchmark FTSE/JSE Africa All-Share Index has climbed 3.6 percent this year, compared to 18 percent last year and 23 percent in 2012.
The PIC’s first mandate is to get good returns for state-worker pensions, which make up about 90 percent of the funds it manages.
Under Matjila’s lead, it’s done that, with assets under management growing 3.5 times to 1.6 trillion rand. In the year ended March, the Government Employees Pension Fund, the PIC’s largest client, reported a total return of 14.77 percent, excluding offshore investments. The All-Share index rose 20 percent in the same period.
The government has also directed the company, whose chairman is Deputy Finance Minister Mcebisi Jonas, to support its efforts to tackle the issues holding back economic growth such as a lack of power supply and transport routes. It is also trying to help end the legacy of white domination in the economy by supporting black-owned businesses.
“He’s got a very rare combination of being very strategic and being very technical,” Patrice Rassou, head of equities at Sanlam Investment Management, said in an interview. “He grasps issues very quickly. He is someone who has the big-picture thinking.”
Matjila has a PhD in math and completed a diploma in mathematical finance at Oxford University. With his parents too poor to be able to afford his studies, Matjila at one stage worked at a car-parts factory on the outskirts of Pretoria to pay his way, according to Brian Molefe, who recruited him to the PIC.
Matjila declined to comment for the story when contacted by phone.
Initially, Matjila stayed in academia. Already affectionately known as Dr. Dan -- a nickname that has stuck -- Matjila was popular with students when he lectured in applied math at what is now known as the University of Limpopo, in the northern town of Polokwane.
Dressed in the best suits he could afford, he would stand at the small chalk board in his office without supporting documents and show students and colleagues how to work out problems, according to Bethuel Ramadisha, a fellow math lecturer at the time.
“You would go to him if you couldn’t solve something,” Ramadisha said in an interview. “He would solve it. He could keep it all in his head. He would go to class without any notes with him, but he knew exactly what to say and when to say it. His students were always flocking at his office, because they knew he could explain things to them.”
Outside of work he led a quiet life, often spending weekends playing soccer and watching matches on TV, Madisha said. Matjila’s ambition and poor pay eventually drove him to the private sector, he said.
After stints at Anglo American Plc and Stanlib Asset Management, Matjila was hired as a risk manager at the PIC by then-CEO Molefe in 2003, who promoted him to CIO two years later.
“He’s got a very comical way of looking at life,” Molefe, now at the helm of state logistics operator Transnet SOC Ltd., said in an interview. “It doesn’t matter how complex a problem is, he can reduce it into a very funny anecdote.”
Even before his predecessor Elias Masilela resigned in June, observers often said Matjila held more sway at the PIC.
“He was in charge of the whole quasi-political oversight of PIC and its activities,” Peter Attard Montalto, an economist at Nomura International Plc, said in an interview. “He gave the PIC a much firmer overall strategy than they had before, much more aligned to thinking bigger picture, thinking about development more generally, and probably being more gutsy around some of the interventions, particularly in equities.”
The PIC has a say in most corporate issues in South Africa. About 55 percent of its funds are in listed assets, making up 13 percent of the entire value on the Johannesburg stock exchange, while 35 percent is in bonds.
Matjila this year helped scupper a takeover bid for South African drugmaker Adcock Ingram Holdings Ltd. by Chile’s CFR Pharmaceuticals SA, arguing it was a bad deal.
Matjila revealed his trademark sense of humor in an August interview in Johannesburg, when he recounted a conversation with former Adcock CEO Jonathan Louw, who backed the deal, about the company completing a renovation of its plants. The “bride is now dressed and ready for the wedding,” Louw said, according to Matjila. “That’s an expensive wedding dress,” Matjila responded, referring to the upgrades.
At other times, Matjila has been a voice of moderation. When South Africa’s biggest cement maker, PPC Ltd., was gripped by a three-month conflict between its CEO and the board, he called for the body to be strengthened rather than totally replaced as some other shareholders, including Foord Asset Management, had wanted.
The parties eventually agreed to replace some of the company’s board members without holding a meeting to vote on whether to have a total clear-out as had been planned.
Under the government’s direction, the PIC has allocated 5 percent of its funds to what it calls developmental investments, including health and education.
Among the issues Matjila has committed to tackling are disproportionate executive pay and the poor conditions mine workers live in, which have contributed to repeated strikes over the last few years.
“All these issues which were at the fringe of investing have become more mainstream now,” Sanlam’s Rassou said. “The PIC and Dr. Matjila have been at the forefront of this thinking. We are forced as investors to sort out these key issues of sustainability.”