The growth of an independent asset management sector is essential if the industry is going to remain creative and if we are to avoid the dominance of a few large firms. When the firms are black-owned and managed, it is even better: different cultures and life experiences can only make the industry more vibrant and exciting.
The Public Investment Corp has often called for the creation of a black champion fund manager and urged firms, many of which are still subscale, to merge. But if these fund managers wanted to work in a big firm, they would. No doubt the Old Mutuals, Sanlams and Stanlibs of the world would love to get them on the payroll. But market forces will mean some attrition and a few mergers — though merging investment cultures is notoriously difficult.
27four’s annual BEE.conomics survey is a very useful summary of the state of black-owned fund managers. There are now 41 firms, which manage R409bn of assets. This sounds like a lot of money but it is just 4. 6% of the SA investment and savings pool. It would be larger if all the eligible managers entered the survey.
The largest BEE manager, Taquanta, has R105bn under management. It ticks the boxes in terms of ownership and staff. Its guiding spirits — Stephen Roberts and Stephen Rogers — are white but, to their credit, they have transferred skills to numerous up-and-coming black fund managers. And, unlike most BEE managers, Taquanta does not depend on active equity mandates from one of the large state or parastatal funds — it has a core client in Nedgroup unit trusts and skills in quantitative management and indexation.
The second-largest BEE manager is one of the newcomers. Aluwani Capital Partners has R68bn under management, most of it provided by MMI Holdings, which transferred part of the assets run by the old Momentum Asset Management. Because MMI can recall these assets at short notice, Aluwani aims to get a wider base. It is no accident that it has taken space in the same office park as the Eskom Pension & Provident Fund, the largest nongovernment fund.
At the other end of the spectrum are funds that manage no assets, such as Lodestar, Heritage Capital and Seriti.
An encouraging trend is the increased diversity of managers. Until recently, fundamental equity managers dominated. But there is an increase in specialist managers:Meago, Sesfikile, MSM and Prescient Property in property; hedge-fund group All Weather Capital; and private equity manager Ata Capital.
An interesting trend is that BEE managers are clustered around Sandton, while established fund managers are still based largely in Cape Town. Many black fund managers who trained at the large Cape firms did not want to stay. One reason is that their clients are mostly in the north; executives in small firms can’t afford to spend their lives on planes.
Over the year, assets under management in Gauteng increased by 157%, while in the Cape they fell by 4%. The Gauteng number is distorted by the entry of Aluwani into the tables with nearly R70bn. Another big contributor was Mazi, which increased assets by 64% to almost R40bn.
And two of the large Cape-based managers — Kagiso Asset Management and Afena — had large withdrawals. At least in Kagiso’s case there was continuity in the team. In Afena’s case the founding partners, Tebogo Naledi and Khulekani Dlamini, sold their shareholding to their younger colleagues and exited the business. Afena, with modest assets of just R4.6bn, is no longer a top-10 BEE manager.
This shows how quickly fortunes can change.