South African Pension Funds Under Fire for R10bn Investment in Metal Bridge

A contentious plan to invest R10bn of metalworkers' pensions in a new company called Metal Bridge has drawn criticism from the Financial Sector Conduct Authority (FSCA). The authority has expressed concerns that the funds could be at high risk if the plan proceeds. The proposed investment involves the Metal Industries Provident Fund and the Engineering Industries Pension Fund, which have over 200,000 contributing members combined.

The investment plan, presented by Elias Monage, a leading black business figure, and Costa Economou, a top asset manager, has raised several red flags. The FSCA has noted that Metal Bridge does not yet have a licence to run a financial services company and does not comply with the funds' own investment policies. Furthermore, the funds could provide no evidence that Metal Bridge had been weighed against a single rival manager, which the regulator considers a significant gap.

The FSCA has also questioned the ownership structure of Metal Bridge, which is set to receive the R10bn investment. According to the regulator's records, Economou is the sole shareholder, while the funds claim to hold a 40% stake in the company. The authority has described this as a potential misrepresentation. The funds' trustees have complained that they felt pressured into agreeing to the scheme at a special board meeting in March.

The proposal for Metal Bridge was pitched as a vehicle for transformation and job creation in the industries where the funds' members work. However, the funds would receive less than half of the proceeds of Metal Bridge's investments, despite funding the entire business. The FSCA has warned that a R10bn allocation to a new, co-owned platform is material and high risk, and that investing it in Metal Bridge, an upstart asset manager, is inconsistent with prudent risk management.

Economou has confirmed that he authored the proposal and is one of the key investment individuals listed. He has also confirmed that no capital has been drawn and no investment made, but that the funds have paid commitment fees to cover Metal Bridge's costs. The fees, which are negotiated by the funds' consultants, are confidential. Economou has denied any misrepresentation, saying he was the sole shareholder when Metal Bridge was incorporated in 2025.

The FSCA has demanded answers from the funds, including minutes, recordings of board meetings, and the due diligence report. The regulator has also expressed concern that the funds' members were not informed about the proposed deal with Metal Bridge. The authority has said it cannot confirm that Metal Bridge belongs to a recognised private equity industry body, which is a requirement.

The investment plan has sparked concerns among trustees, with one describing it as a recipe for disaster. The trustees have demanded to know who really owns Metal Bridge. Economou has said that Bloom Bridge Holdings now owns 50% of the company, while a new company, Filotimo, owns 10%, and each fund owns 20%. The two companies belong to Metal Bridge's investment professionals, including Economou.

Key points

• The Financial Sector Conduct Authority has warned of high risk to metalworkers' pensions in a proposed R10bn investment in Metal Bridge.
• The investment plan has raised concerns about the ownership structure of Metal Bridge and the potential misrepresentation of who owns the company.
• The funds' trustees have complained that they felt pressured into agreeing to the scheme at a special board meeting in March.