The Financial Sector Conduct Authority's move to open a formal investigation into South Africa's largest asset manager adds another layer of scrutiny to an institution already facing pressure on many fronts.

The governance crisis at the Public Investment Corporation (PIC) continues to escalate, with the Financial Sector Conduct Authority (FSCA) announcing it has opened a formal investigation into South Africa's largest asset manager following the precautionary suspension of chief executive Patrick Dlamini.

The regulator said on Tuesday it had become "increasingly concerned" by recent developments at the PIC, citing governance, leadership stability, transparency and the potential impact on confidence in one of the country's most important financial institutions.

The investigation follows the PIC board's decision over the weekend to place Dlamini on precautionary suspension after receiving a whistleblower report alleging impropriety. The board has repeatedly stressed that the suspension is not a finding of guilt, but is intended to allow for an independent investigation while giving Dlamini an opportunity to respond to the allegations.

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In a statement issued after 10pm on Tuesday, the FSCA confirmed it will investigate the developments under section 135 of the Financial Sector Regulation Act, noting that the PIC is an authorised financial services provider that falls under its regulatory oversight.

While the regulator did not specify the scope of its investigation, it said it had taken note of the whistleblower allegations and recent media reports surrounding...