Johannesburg - Bridge Fund Managers, formerly known as Grindrod Asset Management, wanted to grow assets under management from the current R14.5 billion to between R60 billion and R80 billion in the next three to five years, Bridge executive director and head of fund management Paul Stewart said on Tuesday.
The company on Monday announced a deal that would result in investment company Infinitus Holdings taking a 76 percent stake in Bridge.
Infinitus is focused on high-growth businesses in the consumer, industrial and financial services sectors. At the end of December 2016, Grindrod Asset Management had assets under management of R14.5 billon.
Stewart said Bridge wanted to increase the assets under management and grow revenues through access to more retirement funds, retail investors and high net worth individuals.
“We do not want to be the largest fund manager. Size only gives people comfort. It does not necessarily translate into better investment outcomes. In fact the opposite is true. The bigger the fund, the more difficult it is to perform. This business can grow to between R60 billion and R80 billion. That is doable in three to five years. We would not like to grow bigger than that,” Stewart said.
Grindrod, through subsidiary GFS Holdings, would exchange its entire Grindrod Asset Management for Infinitus shares.
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Following the transaction, Infinitus would hold 76 percent of the equity in Bridge Fund Managers, with management and staff retaining the remaining 24 percent interest.
After the transaction, GFS would own 49 percent of Infinitus and therefore Grindrod retains a major indirect stake in Bridge Fund Managers.
“So Grindrod is not exiting, but changing the way it holds its interest in the business. This is an important step to free up the business to develop its own identity as Bridge Fund Managers and pursue sensible growth opportunities while retaining its loyal client base,” GFS managing director David Polkinghorne said.
Stewart was buoyant about Bridge’s growth prospects as the company was developing its own brand and identity outside of the Grindrod fold.
“There has always been confusion, because Grindrod is known as a shipping company, while we are in financial services,” he said.
Potential clients
He said being part of a big and listed group had its limitations. Companies in competition with Grindrod, which previously would not consider the company, were now potential clients. He said the company also wanted to grow its foothold in the retirement funds space. On February 28, the company would complete its full five-year track record.
“So far, that track record is good. That will allow us to have a decent conversation with the retirement funds,” he said. Being on its own would also enhance Bridge’s pursuit of acquisitive growth, in addition to organic growth. Bridge would address the existing “disconnect” between clients and asset managers. Often the fund managers achieved their targets without necessarily meeting the clients’ needs, he said.
There were expectation, understanding and trust gaps, which often led to misaligned outcomes, he said. “The industry earns its fees, however, client’s investment objectives are often not achieved. We aim to bridge the gap,” said Stewart.