When investing in Parastatals and Municipalities specifically, over and above the ability to generate appropriate returns, we also consider the right amount of risk adjusted outperformance for our investors. For instance, we consider the enabling role they have played and continue to play in our communities, such as providing households with access to electricity, water, road access, transport and in some cases employment. It is this positive contribution that also plays a role in our investment case. This approach is also applied when we consider support for private corporates that are making a difference in the low cost housing, home improvement, transport and low income rental market to name but a few.
With the slowing of the economy and the higher rate cycle, we suspect many other asset managers have responsibly reduced their exposure to certain industries and parastatals that perform worse in this part of the economic cycle. For us, this is mainly due to concerns around sustainability or where we believed that we were not being adequately compensated for risks that are apparent to us. However, we have been increasing or maintaining large exposures to certain other parastatals, where we have observed that there has already been an improvement in the risk factors or even where there have been improvements in their governance structures.
Whilst some of the parastatals have found it difficult to raise funding in this environment, others have managed to fund themselves easily. For example, Transnet announced earlier in the year that they had largely filled their funding requirement for the rest of the year and earlier last month suspended their weekly auctions, probably as a result thereof. Eskom has a number of local and international funding sources and certain large local asset managers that we expect will continue to fund them going forward. We have continued to maintain open channels with all parastatals to better evaluate the situation regarding the exchanges with the Ministry of Finance and to responsibly influence positive change that can give us comfort as investors.
We take much the same approach across all the sectors in which we operate in to optimise the return for our clients. We are continuously monitoring the situation and we are careful not to generalise the risk across the varied number of parastatals, municipalities and quasi government entities within South Africa.
With the slowing of the economy and the higher rate cycle, we suspect many other asset managers have responsibly reduced their exposure to certain industries and parastatals that perform worse in this part of the economic cycle. For us, this is mainly due to concerns around sustainability or where we believed that we were not being adequately compensated for risks that are apparent to us. However, we have been increasing or maintaining large exposures to certain other parastatals, where we have observed that there has already been an improvement in the risk factors or even where there have been improvements in their governance structures.
Whilst some of the parastatals have found it difficult to raise funding in this environment, others have managed to fund themselves easily. For example, Transnet announced earlier in the year that they had largely filled their funding requirement for the rest of the year and earlier last month suspended their weekly auctions, probably as a result thereof.
Eskom has a number of local and international funding sources and certain large local asset managers that we expect will continue to fund them going forward. We have continued to maintain open channels with all parastatals to better evaluate the situation regarding the exchanges with the Ministry of Finance and to responsibly influence positive change that can give us comfort as investors.
We take much the same approach across all the sectors in which we operate in to optimise the return for our clients. We are continuously monitoring the situation and we are careful not to generalise the risk across the varied number of parastatals, municipalities and quasi government entities within South Africa.
