LISTED ASSET MANAGERS LOOK ABROAD TO BOOST PERFORMANCE

As South Africa’s savings pool contracts and retirement schemes are defunded due to high unemployment, where will locally-listed fund managers find future growth?

- Brendan Peacock

Most of South Africa’s asset management firms are either privately held or sit within broad larger entities, such as financial institutions. Within those broader groups, the performance of the tied asset managers is largely inconsequential in terms of group share performance. However, there are a few truly independent listed asset management firms that are worth a look for retail investors.

The lack of independent listed options is not surprising when one considers their business models – generally light on capital expenditure, with the only real cost being employees. There is almost never a reason to tap the markets for capital, though Sygnia’s acquisition of DBX demonstrates its utility in certain cases.

Some of the listed independent asset managers were unbundled from larger financial institutions and have remained listed for various reasons including; prestige and marketing value, incentive schemes and a relatively low level of corporate action in the sector. Combining house views, investment styles and management teams can throw up serious barriers to consolidation, even if it would provide efficiencies of scale.

Sygnia and Anchor Capital are two rare examples of asset management firms that went through the process of an initial public offering, but Anchor recently delisted after buying back its shares after just six years on the JSE.