Coronation, which manages funds valued at more than R600bn, says 42% or R254bn of that is managed by black investment professionals, making the group one of the most transformed companies in the industry.
The Cape Town-based group said half of its SA investment team leaders are black, while 67% of its executive committee is made up of historically disadvantaged individuals.
CEO Anton Pillay told Business Day on Tuesday the 30-year-old firm had made great strides in transforming the industry.
“It is important to recognise that not all black investment professionals want to start their own asset management companies; some do want to work for established companies like Coronation. If you look at our bursary programme and internships, we put a lot of effort into ensuring that we focus on black people to create a pipeline for our business,” he said.
“We have a portfolio management programme in place as well to advance both black and women analysts. It has been a very considered and deliberate approach to grow the black pool of talent within Coronation.”
The group’s assets under management grew 4.9% to R602bn in the for the year to end-September. Still, it expects outflows from SA will continue as long as unemployment remains high and households face greater pressure, leading investors to look elsewhere to invest.
“The growth will come from the international portfolio to the extent we can attract foreign flows. The growth will also come from our ability to attract clients in SA from new strategies. Ultimately, the growth will come from the ability of the country to turn the economy around,” Pillay said.
Coronation, valued at about R11.3bn on the JSE, said the year under review was characterised a continuation of the difficult environment of the past several years, as evidenced by anaemic market returns across domestic asset classes.
Fund management earnings per share, Coronation’s primary measure of financial performance, fell 57.3% to 165.2c, largely because of the company’s dispute with Sars that will be heard by the Constitutional Court.
Excluding the effects of the case, fund management earnings per share declined 4.3% to 370.2c.
Revenue fell 2.4% to R3.6bn and profit from fund management 14.2% to R1.6bn
Profit slumped 50% to R640m and headline earnings per share (HEPS), a common profit measure in SA that excludes certain items, dropped 50.1% to 182.9c.
The total dividend for the year of 165c, amounting to R577m, was 4.1% lower year on year.
Pillay called on the government to speed up plans to roll out infrastructure projects, saying that would not only grow the economy, but see more capital flowing into the economy.
“We have to get infrastructure spending correct. We have to create the right environment to instil the necessary level of confidence to make it easy for capital to flow into the country for investment into infrastructure,” Pillay said.
“The second thing is to make our state-owned entities functional. We have seen the impact of Transnet and Eskom on the economy. In the long term the focus has to be on education. We cannot grow the economy if we do not educate the people of the country.”
The Supreme Court of Appeal found in February that Sars was within its rights to claim taxes from the Coronation for income earned by its Irish subsidiary, stretching back to 2012.
The decision paved the way for Sars to claim additional taxes in respect of profits earned by international operations, together with interest and costs. The tax bill is about R800m.
Pillay said the outcome of the case was important because the stance taken by Sars has ripple effects for not just the company but also the entire financial services industry.
“The application of section of 9D in terms of foreign business establishment does not only apply to asset managers but other companies in the industry,” he said.
Update: November 21 2023
This story has additional information from an interview with Coronation CEO Anton Pillay
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