Total assets under management by black-owned fund managers has almost doubled over the past year, thanks largely to the restructuring of the Sanlam group to advance broad-based BEE imperatives.
The 13th annual BEE.conomics survey, a gauge of transformation in the asset management sector that is published annually by 27four Investment Managers, shows that total assets managed by black-owned firms surged to R1.15-trillion by June 30 2021, up from R667.8bn a year earlier. The jump was largely attributed to the inclusion of Sanlam Investments, which added R344bn to the overall assets under management (AUM) of firms in the sector defined as black-owned.
Sanlam in August 2020 announced the sale of a quarter of its third-party asset management business to the financial services unit of Patrice Motsepe’s African Rainbow Capital (ARC), establishing one of the biggest black-owned fund managers in the country. Speculation has also been rife that Sanlam and ARC are eyeing Absa’s asset management unit that could boost their AUM even further.
“The financial sector has repeatedly been called out by the B-BBEE Commission for its slow pace of transformation relative to other economic sectors,” said Joe Letswalo, chair of the transformation action forum. “When we think of an economic recovery we must shape and influence the type of recovery we want and for whose benefit.”
Almost three decades after the end of apartheid and 17 years since the adoption of a voluntary transformation charter, the local asset management industry is under increasing pressure to boost the participation of black-owned companies. Deputy Finance Minister David Masondo has been especially vocal about the need for transformation in the sector, and warned that regulators will be granted additional legislative powers to monitor and police the pace of transformation.
The BEE.conomics report shows that 55 asset managers met 27four’s criteria for participation across both public and private markets, up from 51 in the previous year. To qualify for inclusion in the report, asset managers must be at least 51% black-owned; must have a board of directors that is at least 51% black; and a minimum 51% of its senior portfolio managers must be black. Companies must also be registered with the Financial Sector Conduct Authority (FSCA).
The top five firms by AUM are Sanlam Investments, Taquanta Asset Managers, Prescient Investment Management, Aluwani Capital Partners and Vunani Fund Managers, which together represent 73% of the assets overseen by black-owned investment firms. The average AUM of companies included in the report was R21bn.
The report estimates that the market share of black-owned firms in the SA regulated savings pool — excluding banks, short-term insurers and medical schemes — including and excluding internally managed institutional assets is 14% and 20%, respectively. Black-owned firms that participated in the report were found to support a combined 1,157 jobs.
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