Ninety One, the asset manager that started out as a unit of Investec three years before SA became a democracy, has plans to ramp up its operations in the world’s two biggest economies, after having established itself as a major player in Europe.
CEO Hendrik du Toit, who founded the firm in 1991 before he had turned 30, said Ninety One wants to aggressively expand its UK business in the near term and sees “needle-moving” longer-term growth opportunities in the US and China. North America is the world’s biggest asset management region with $49-trillion in 2020, according to Boston Consulting Group.
The London- and Johannesburg-listed firm, which reports its results in pounds, outlined its growth plans during a media call after the release of its results for the six months to end-September, when assets under management (AUM) reached a record £140bn (R2.86-trillion), benefiting from higher markets and net inflows of £3.9bn.
Ninety One said those net inflows were driven by institutional and adviser flows, helping to boost its half-year profit before tax by 39% to £132.1m. The firm declared an interim dividend of 6.9p a share.
“In the coming years we are going to make a big push into the UK market to establish a strong domestic presence in what is our second-biggest market,” Du Toit told journalists after the results. “But the real growth in this business will be driven where the money is ... which is North America. That’s where the real battle will be for needle-moving long-term growth.”
Du Toit told Business Day that North America was rebalancing investment portfolios in favour of global and emerging markets after years of being “overweight” domestic assets. Ninety One believes it can capture a healthy portion of these flows due to its strong track record in managing globally focused emerging-market funds.
“We think there will be quite a substantial flow to rebalance North American portfolios over the next five to 10 years.”
Du Toit has grown Ninety One into SA’s biggest listed asset manager with offices in Cape Town, London, New York, Hong Kong and Singapore.
He started his career as an equity analyst at Old Mutual and established his own asset management business in 1991, shortly after his return to SA from studying abroad.
The collapse of the Berlin Wall in 1989, followed soon by the death throes of apartheid, convinced Du Toit that rapidly liberalising market forces were about to change financial services forever. He started Investec Asset Management with just two desks and R225m in assets, compliments of two pension funds.
Thirty years later the company has rebranded as Ninety One after being spun off from Investec in 2020 with more than half its AUM coming from Africa (£50.52bn) and the UK (£27.83bn). It also manages sizeable assets in Europe, the Americas and the Asia-Pacific region.
While it wants to ramp up its UK business — the biggest asset management market outside the US — by growing the market share of its domestic fund range, Ninety One’s plan for North America is to offer investors access to its global and emerging-market funds, replicating its business model in Europe.
“If you try to compete head-on with the Americans on home turf with domestic assets, you’re going to lose,” Du Toit said.
Though Europe, excluding the UK, was the second-biggest contributor to Ninety One’s net inflows in its first half, accounting for about £1.25bn, Du Toit does not see the region as a major growth catalyst. He said the region can be difficult to penetrate given the variety of countries and languages.
China
“The North American opportunity is much larger than anything else in terms of relative growth,” said Du Toit.
“The other needle-moving initiative is whether we get our China positioning right.”
Nevertheless, Du Toit said the Chinese growth opportunity is more longer term, and while the firm will invest in equities there, it does not plan to distribute its funds in the world’s second-biggest economy yet.
Its fund offering in that region will remain focused on Hong Kong. “We are optimistic about the investment prospects in China,” said Du Toit. “But it’s not [an] ... earnings driver for us” over the next three years.
Du Toit also stressed that Ninety One’s preference was to continue to grow organically — as it had largely done since inception.
“Sometimes there’s a real cheap opportunity but we don’t see that in a world of zero interest rates,” he said. “Acquisitions are really risky because you’re buying assets at elevated levels today and we don’t think that’s the right thing to do.”
theunisseng@businesslive.co.za
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