Cape Town-based fund manager, 10X Investments’ chief executive Steven Nathan, on Thursday told investors that Steinhoff International’s heavy losses had not had a material impact on the financial group’s own funds.
Nathan’s assertions were meant to steady nerves of 10X’s investors as news organisation Moneyweb reports that “virtually every South African with investments in the form of retirement savings via retirement annuities or provident and pension funds, will all be poorer because of what has happened to Steinhoff”.
Moneyweb reported that the Government Employees Pension Fund (GEPF) would be hard hit.
Retail holding company Steinhoff’s shares plunged by more than half after it announced on Wednesday that its chief executive, Markus Jooste, had suddenly resigned and that it had asked for an investigation into accounting irregularities and possible fraud. The announcement came as a shock to investors.
Jooste had been at the helm for nearly 20 years and oversaw its expansion to one of the world’s largest household goods retailers.
The company, which recently became a star of the JSE as it gobbled up various European retailers, is the subject of an investigation into accounting irregularities in Germany.
But 10X’s Nathan said the group’s exposure to Steinhoff was managed through diversification, and described the 1.1 percent holding as “modest”.
“Events like this highlight the benefits of diversification within a broad index fund,” Nathan said.
“While just about every local investor will be impacted, active fund managers take on more concentration risk as a matter of course; those with a higher Steinhoff weighting will see a larger impact on their returns.”
Steinhoff board, in consultation with the statutory auditors of the company, has approached auditors PWC to perform an independent investigation.
Meanwhile, Steinhoff said it had received expressions of interest in non-core assets which would release a minimum of €1billion of liquidity into the company.
– African News Agency (ANA)