PIC defends its support for Concor

The Public Investment Corporation (PIC), which manages the Government Employees Pension Fund (GEPF) and Unemployment Insurance Fund (UIF), has defended its financial support for construction company Concor, which entered business rescue last month.

This is despite allegations of a chequered ethical and governance history involving Concor’s former majority shareholder, the Southern Palace Group (SPG).

Moneyweb asked the PIC to provide the rationale and justification for its decision to provide further liquidity to Concor prior to 2025 and for its decision in May 2025 to convert about R1.18 billion of shareholder debt into preference equity, which resulted in the GEPF and UIF becoming Concor’s effective shareholders.

PIC spokesperson Adrian Lackay said the corporation believes it is necessary to address a number of misconstructions regarding these issues and Concor.

Lackay said the initial investment by the PIC on behalf of the GEPF in 2017 was to acquire a 25% shareholding in Concor.

He stressed that the PIC did not fund SPG to acquire a majority shareholding in Concor.

“The PIC invested alongside the SPG in Concor, through a R262 million loan facility to Concor and a R13 million equity subscription, on behalf of the GEPF,” he said.

Lackay said when Concor defaulted on its loan obligations in 2022, the PIC, with the consent of its clients, supported a consensual turnaround for the company instead of immediate business rescue.

He said the PIC was particularly concerned about the potential impact of large-scale job losses and the risk that business rescue proceedings could pose to major infrastructure projects undertaken by the South African National Roads Agency (Sanral) and Eskom.

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“A condition for further PIC support in 2022 was that the Concor board had to improve corporate governance standards and operational reform in the company,” he said.

“Importantly, the PIC supported the appointment of Deloitte as an independent Chief Restructuring Officer (CRO).”

Lackay said the turnaround programme strengthened Concor board and management oversight, resulting in more disciplined tender and project-selection processes, enhanced project-level risk and financial controls, and closer monitoring of legacy and loss-making contracts.

He said these reforms were intended to improve accountability, cost discipline and cash conversion, while repositioning Concor towards commercially sustainable projects with appropriate margins and risk profiles.

Lackay said as part of the governance reforms, the PIC worked with and supported the decision of the Concor board to suspend former CEO Lucas Tseki, who was also a director of SPG.

By the end of 2022 the parties terminated the employment relationship through mutual agreement.

PIC ‘did not’ acquire 28% of Concor for R400 000

Lackay said the PIC had protected client loans to Concor by insisting that SPG and Nicasio, the other empowerment partner, provide guarantees and the cession of their shares in the event of any defaults.

“Once SPG went into business rescue, it gave the PIC the contractual right to cross default and perfect its security of the SPG shares.

“On recommendation of the Concor CRO, the PIC acquired the shares for R350 000.00 to fund the business rescue of SPG – R1 for the shares and R349 999.00 for the business rescue proceedings.

“The assertion … that ‘the PIC in 2024 purchased a 28.12% stake in Concor for R400 000, which is indicative of a valuation decline of more than 99% from the original acquisition price’ is factually incorrect,” he said.

Lackay said the balance sheet restructuring of Concor and interdependent regulatory, ownership and legal requirements that were completed in May 2025 enabled the conversion of shareholder loans from the GEPF and the UIF into R1.18 billion equity.

“This cannot be interpreted as financial support for SPG. The entity was no longer part of the Concor ownership structure.”

Lackay stressed that as a long-term investor, the PIC prudently considered options for Concor to preserve jobs and value for client investments.

He said that with the support of its clients, the PIC continued to support the Concor board strategy to improve corporate governance and operational reform.

But Lackay said a major setback for Concor’s recovery occurred when Murray & Roberts, its joint venture partner, entered business rescue at the end of 2024 and contingent liabilities from distressed historic projects, including guarantee payments, became due immediately.

Read: Concor’s urgent bid related to wind farm project with M&R fails

Lackay said the PIC was not party to the civil litigation and subsequent criminal proceedings between the IDC and the directors of SPG, and these legal proceedings did not involve PIC funding.

Funding secured under ‘false pretences’, summons issued

IDC head of corporate affairs Tshepo Ramodibe said the IDC on 27 February 2020 issued summons against SPG for securing R185 million funding from the IDC under allegedly false pretences and a separate R60 million revolving credit facility for Genrec, which Southern Palace had acquired from Murray & Roberts.

Ramodibe said the IDC obtained a judgment against SPG prior to the company going into business rescue and SPG subsequently applied for leave to appeal the term loan judgment, which was dismissed in February 2022.

He said the IDC has since recovered the revolving credit loan amount from the sale of attached assets.

“Following the SPG’s entry into business rescue, the IDC lodged its claims and, as a creditor, continues to participate in the ongoing business rescue process,” said Ramodibe.

“As far as this matter is concerned, the IDC is a creditor in the ongoing business rescue process.”

Ramodibe confirmed that the IDC has sued the estate of Paulos Sello Mahlangu, the owner of SPG, for R180 million based on dereliction of duty in his capacity as a director of SPG.

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