The Public Investment Corporation’s (PIC’s) journey in funding BEE transactions, particularly within its unlisted portfolio, has yielded successes and challenges. It has also provided valuable lessons on how best to structure these transactions in a commercially sound manner while preserving the transformation imperative.While the unlisted portfolio accounts for about 4.5% of the total assets under the PIC’s management, it has achieved significant milestones since its inception. As at March 2026 total assets under management stood at R3.7-trillion, up from R3-trillion the previous year, reflecting growth of 23%.The unlisted portfolio grew 3.6% in the year to March 2026. The 2022 unlisted investments mandate delivered a 16% internal rate of return, exceeding its benchmark. Such a positive return is an admirable investment return, especially in light of the recent high risks and uncertainty in the global markets. The portfolio has also contributed to the creation and preservation of about 200,000 jobs.Much of the negative publicity surrounding the PIC originates from investments concluded before the Mpati commission sat. Both the current board and management accept responsibility for the PIC’s overall performance. Our task is to resolve these legacy investments responsibly while preserving value for clients. Several impaired investments remain in the portfolio and will need to be exited without violating any contractual obligations.The PIC has pursued a range of approaches to resolve these legacy matters, including negotiated settlements, court processes and arbitrations. In doing so, a healthy tension has sometimes emerged between the board and management over the processes followed and the outcomes achieved. In certain instances the board has taken the view that settlement processes and outcomes could have been more favourable for workers and beneficiaries.Not every investment is guaranteed to succeed, otherwise there would be no such thing as investment risk. However, the PIC cannot operate as though it has learned nothing from its past successes and failures. We must confront that history, draw lessons from it and build a stronger, more disciplined institution for the future.The PIC has pursued a range of approaches to resolve these legacy matters, including negotiated settlements, court processes and arbitrations. In doing so, a healthy tension has sometimes emerged between the board and management over the processes followed and the outcomes achieved. One of the most important lessons relates to the way BEE transactions were financed in the past. The PIC’s empowerment mandate has long included such funding. In pursuit of the empowerment objective, the PIC often extended loans through special-purpose vehicles (SPVs), with repayment largely dependent on dividends received from the underlying investee companies. These are known as dividend-dependent loans.Several PIC-funded BEE transactions were underpinned by fundamentally sound businesses, including Bafepi SPV (Afgri), Tosaco (TotalEnergies South Africa), SA Homeloans and Acapulco (Lanseria Airport). However, dividend flows across these structures were mixed, and in some cases absent for extended periods. This tended to constrain these companies’ ability to service their debt, resulting in prolonged indebtedness and valuation pressure despite the operational resilience of the underlying businesses.The experience of Acapulco and similar transactions illustrates the challenge. It would seem Acapulco’s ability to repay the PIC was heavily dependent on dividends from Lanseria Airport. Yet Lanseria did not declare dividends for close to a decade. As a result, the loan remained unpaid and eventually defaulted.The PIC’s investment in TotalEnergies, through a BEE consortium funded to participate in the target entity, is in default despite the strong performance of the underlying investment. Recent valuations indicate that the value of the shares exceeds the outstanding loan balance. However, due to the dividend-based repayment structure, the transaction faces the same challenges as Acapulco.This raises a broader question: should the PIC continue financing business transactions where repayment is dividend-dependent? From a commercial perspective, there is a fundamental mismatch in such structures. A company has no legal obligation to declare dividends to any shareholder, whether black or white. By contrast, a borrower has a contractual obligation to service debt and pay interest. Loan repayments should therefore not depend solely on discretionary dividend decisions taken by another company.Had transaction structures such as Acapulco required regular interest servicing from the outset, warning signs would likely have emerged far earlier, enabling timely intervention and recovery. Instead, dividend-dependent structures often delayed the recognition of distress and complicated recovery efforts.To be clear, not all empowerment transactions failed. Some borrowers successfully used dividend flows to repay their loans. However, the PIC’s review found that many legacy BEE transactions were inadequately collateralised, dependent on uncertain dividend streams and insufficiently aligned with the cash-generating capacity of the underlying assets.Comprehensive review of empowerment funding modelThe lessons drawn from these experiences have prompted a comprehensive review of the PIC’s empowerment funding model. The PIC remains firmly committed to transformation and broad-based ownership. However, empowerment transactions must also be commercially sustainable and capable of delivering real returns to workers and beneficiaries whose savings the PIC manages.Drawing on the lessons of the past, the PIC has strengthened its funding framework. New empowerment structures are now designed around robust commercial principles while maintaining transformational objectives.These reforms include clearer dividend and cash-flow policies; diversified repayment sources; stringent collateral requirements; enhanced transparency and see-through access to underlying businesses; board representation where appropriate; and early-warning mechanisms to identify distress before it escalates into long-term impairment.The objective is simple: to ensure that future empowerment transactions are commercially viable, transformative and developmentally impactful. Transformation and financial sustainability are not competing goals. Properly structured, they reinforce one another.By learning from the mistakes of the past, the PIC can continue advancing economic transformation while safeguarding the retirement savings entrusted to it by millions of South African workers.• Masondo is deputy finance minister and chairs the board of the Public Investment Corporation.