Fund management isn’t a big job creator, but it can be profitable for shareholders. Fund managers that have achieved scale, such as Coronation, Ninety One and Allan Gray, have made their founders extremely wealthy indeed.
Many trustees ask their consultants to source the new BEE version of Coronation. The answer is simple these days, as Coronation is now a constituent of the Alexforbes and 27four BEE surveys. According to Forbes, Coronation is now 51.3% black-owned, quite an achievement for a publicly traded listed company.
Its empowerment shareholding isn’t dominated by a single well-connected black businessman, such as Patrice Motsepe or Saki Macozoma, but by black staff (18%) and few trusts that hold shares on behalf of less senior black staff. About 6% of Coronation is also held by what Forbes calls nonblack (white) staff. Coronation has a capable black CEO in Anton Pillay, though for the time being the chief investment officer is nonblack.
The survey makes no distinction between organic and non-organic BEE companies. We should be cheering on BEE companies founded by entrepreneurs. One that has done well — and would undoubtedly win business on a best-in-class basis against all of its peers — is Aeon Investment Management (pronounced Aon, like the global insurance broker), which former Metropolitan chief investment officer Asief Mohamed started. It is 95% black-owned, according to Forbes, with 80% of staff and management being black.
Delphine Govender left a comfortable career as a senior portfolio manager at Allan Gray (which isn’t yet a BEE company) to set up Perpetua. It is entirely black-owned, apart from a 13.5% stake held by Momentum’s IMG, previously called RMI Investment Managers. BEE status is a ticket to the game in the pension fund market, but the only things financial advisers worry about are service and investment performance. To some extent Perpetua outsources its retail marketing to IMG — or at least that was the intention when the deal was struck a decade ago.
Another organic black fund manager is Oasis — based in Cape Town, not Manchester, England. It was founded by Adam Ebrahim, like Govender a refugee from Gray. It was a pioneer of BEE — before the term had even been invented — and one of the few full service balanced managers, one of the nine balanced fund managers that make up the Large Manager Watch. And it is 100% black-owned through Oasis Group Holdings.
There is attrition among black fund managers. Even though they require little capital and don’t need armies of administrators, there have been casualties over the years. African Harvest started as a flag bearer for BEE. Coronation founder Leon Campher started it after he got bored with the increasingly unchallenging task of running Coronation itself. But eventually it fragmented despite strong leadership from the grande dame of fund management, Magda Wierzycka.
Other early BEE managers such as Prodigy and Infinity also faded away, while others were victims of corporate action, such as Metropolitan, Asief Mohamed’s alma mater, which disappeared after merging with Momentum.
Many of the best-performing fund managers in the unit trust space don’t feel undue pressure to gain BEE status. These range from 45-year-old boutique Foord Asset Management to younger businesses such as Fairtree, Truffle and Abax. But we can’t be sure they aren’t organising empowerment deals behind the scenes.
The large life offices had little choice. The fountainhead of SA asset management was the big four of the day: Old Mutual, Sanlam, Liberty — which now has the catchy name of the Standard Bank Insurance & Asset Management division — and the defunct Southern Life Asset Management with a retail division called Southern Life unit trusts.
When Southern merged with Momentum as part of the FirstRand merger Southern Life Asset Management was renamed Futuregrowth, and in what was possibly the most credible empowerment deal so far in the industry, it was sold to BEE tycoon Gloria Serobe’s Wiphold conglomerate. It lost its empowerment credentials for a few years when then Old Mutual Asset Managers boss Thabo Dloti acquired it and merged it with Old Mutual’s plain vanilla fixed-income business.
Futuregrowth is now back in the survey with a 63% black holding, catapulted back into empowerment status improbably enough when a consortium of black female chartered accountants took a stake in the business. Its sister company, Old Mutual Investment Group (OMIG), is also now empowered, through the shareholdings of black staff and management, a BEE entity called the Imfundo Trust as well as the flow-through from the black shareholding of Old Mutual itself.
Sanlam was ahead of its crosstown rival when it achieved BEE status with help from Motsepe, its high-profile deputy chair. A large strategic shareholder in Sanlam Investment Management (SIM) is Motsepe’s African Rainbow Capital, through its financial services arm.
Who knows how SIM will preserve its BEE status once it merges into Ninety One, an Anglo-SA multinational listed in London and Johannesburg. Ninety One, or at least Ninety One SA, needs to join this BEE survey eventually to preserve its huge domestic institutional book.
• Cranston, a financial journalist and former trustee of the TML pension fund, is author of ‘The Mavericks’, a history of SA fund management.
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