Futuregrowth Standoff With South African State-Owned Firms Thaws

  • Asset manager to resume lending to Land Bank immediately
  • Moody’s put Land Lank on review for credit-rating downgrade

The dispute between Futuregrowth Asset Management, Africa’s biggest specialist fixed-income money manager, and South African state-owned companies has started to ease.

The asset manager will start lending again to the Land and Agricultural Development Bank of South Africa with immediate effect, it said in an e-mailed statement Monday. The about-turn follows a review of the governance and investor protection mechanisms at the lender, Futuregrowth said.

The Land Bank was one of six state-owned companies that Futuregrowth said last month it would stop funding due to concerns about how they are being run, government infighting and threats to the independence of the finance ministry. The asset manager said it would also stop lending to power utility Eskom Holdings SOC Ltd., rail and ports operator Transnet SOC Ltd., South African National Roads Agency SOC Ltd., the Industrial Development Corp. of South Africa and the Development Bank of Southern Africa. It said it would only resume offering loans and rolling over existing debt once it determined that proper oversight and governance at the companies have been restored.

The lender, which has a gross loan book of almost 40 billion rand ($2.9 billion), was one of five state-owned companies that Moody’s Investors Service put on review for a credit-rating downgrade earlier this month due to concerns about governance and the political environment.

“Land Bank remains determined to maintain the highest levels of corporate governance, independence of decision-making and to protect the interests of its funders,” it said in an e-mailed statement Monday. “Futuregrowth is a key development partner of the bank.”

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