The PIC invests funds on behalf of public sector entities, based on investment mandates set by each of these clients and approved by the Financial Services Board (FSB). In terms of the partnership, the PIC has now purchased a 40% strategic equity stake in Eduloan on behalf of the Government Employees Pension Fund (GEPF).
As part of this transaction, the PIC also effected the direct investment of the Unemployment Insurance Fund (UIF) and the Compensation Commission (CC) funds, through a debenture subscription. The invested funds from the UIF and CC will help fund Eduloan’s educational loan book, enabling funding to be made available for education loans.
Eduloan has issued new shares to PIC in order to achieve this strategic transaction. Eduloan’s current shareholders, including Open Learning Holdings (OLH) and Standard Bank, will not be selling their shares to facilitate the investment of the PIC in the education finance specialist. The board will continue to have a pivotal role in the strategic guidance of Eduloan, mandated by the shareholders.
This strategic investment is to help as many South Africans as possible to unlock their potential through access to affordable education finance solutions at affordable interest rates, and continuing to ensure effective management of bursary funds.
"We are entering into this strategic alliance with the PIC as a like-minded long-term partner," said Eduloan CEO Totsie Memela. "Our efforts and finances directly impact economic development and enhance quality of life. Therefore, partnering with the PIC is a move to benefit all South Africans through access to finance."
Eduloan has a good reputation and performance track record in the market, specifically underlying their specialised education finance and bursary fund management solutions, and it intends to leverage this experience of over 19 years in the equity investment with the PIC.
This equity transaction will allow Eduloan the opportunity to work with Isibaya, a PIC Fund, which is targeted at providing finance for projects that support the long-term economic, social and environmental growth of South Africa.
"We believe that the strategic alliance with Eduloan helps the PIC to realise its developmental investment mandate, part of which focuses on investment in education," said PIC’s CFO Matshepo More.
"We are excited about our partnership with Eduloan. Eduloan is a leader in education finance and bursary fund management in our country and by working with them, the PIC will be able to capitalise on value creation."
The PIC has strong boardroom representation in Eduloan and will not be a passive investor. The investment by PIC into Eduloan will also fuel further organic growth and possible expansion into new markets.
"Education is one of the most important investments a country can make in its people and its future, and is critical to creating sustainable economic growth and reducing poverty and inequality. That is why an equity transaction with PIC will enable Eduloan to make these goals real," said Memela.