Brian Molefe. Picture: TREVOR SAMSON
Brian Molefe. Picture: TREVOR SAMSON

ESKOM was likely to engage further with Futuregrowth Asset Management on its recent decisions to stop lending to the state-owned group, but wouldn’t "waste" a lot of time on it, Eskom Group CEO Brian Molefe said on Friday.

He was speaking in Johannesburg on the sidelines of the launch of the South African chapter of the Brazil, Russia, India, China and SA (Brics) Business Council portal. Molefe chairs the South African chapter.

"Sometimes to engage with people that do not have an intention of being constructive is a waste of time," said Molefe. "I’m sure we will engage, but we will be cautious not to waste a lot of time."

Eskom was still adequately funded, Molefe said. "In fact, if Futuregrowth does not want us to sell bonds to them, we won’t do so."

At the end of August, Futuregrowth, SA’s largest specialist fixed-income money manager, said it had suspended funding to Eskom and five other parastatals, citing concern about how state companies were being run, government infighting and threats to the independence of the National Treasury.

The five are rail and ports operator Transnet, South African National Roads Agency, the Land Bank of South Africa, the Industrial Development Corporation of South Africa and the Development Bank of Southern Africa.

In September, the Financial Mail said it had found that a number of smaller boutique investment houses had been cutting their exposure to state-owned firms for similar reasons. Among them were Abax Investments, Aluwani Capital Partners and Denmark’s Jyske Bank.

More recently, Futuregrowth decided to stop lending to coal businesses based on its investment principles and questions on the sustainability and environmental effects of coal. Old Mutual owns Futuregrowth, which has about R170bn in assets.

On September 14, rating agency Moody’s Investors Service put Eskom’s ratings on review for a downgrade, citing rising funding challenges Eskom faced in the context of an adverse regulatory framework and an evolving political environment.

The SA Brics Business Council’s newly launched portal is aimed at connecting and promoting regular dialogue between South African individuals and entities with an interest in doing business within the Brics trade bloc.

The portal will also facilitate interaction and enable better understanding of market opportunities in the member states.

With Bloomberg