Johannesburg - Graviton Financial Partners, a wholly-owned subsidiary of Sanlam Investment Holdings, said yesterday it had acquired a 49 percent stake in Firstglobal Asset Management for an undisclosed amount.
Firstglobal Asset Management is an independent manager of six South African and two offshore funds. The company was formed as part of the Firstglobal Group in 2004 and currently manages private client funds for Firstglobal member firms in excess of R7 billion.
Sanlam is upbeat about its acquisition, but some industry experts have downplayed it, saying it is very minor. Carl Roothman, the chief executive of Sanlam Investments Retail, said: “This acquisition is part of the Sanlam Investments’ retail strategy to take select stakes in independent financial advisory firms and multi-manager companies of high reputation.
“This strategy embraces and harnesses the independence of the firms we acquire stakes in and fully supporting the continuation of their existing brand and investment strategies.
“This will further leverage the group’s ability to provide quality advice while driving investment performance for clients in the most appropriate structures.”
Sanlam made a decision four years ago to establish a separate entity and this is how Graviton became a focal point to independently manage and house such acquisitions like Firstglobal Asset Management.
John Swart, chief executive of Firstglobal Asset Management, said: “We look forward to growing this business together by harnessing the resources of Sanlam without giving up our independence. Firstglobal is a firm believer in independent professional advice and will continue to offer the best advice and service available to its clients.”
Industry trends
Brad Preston, a chief investment officer at Mergence Investment Managers, said: “From what I can see this is in line with industry trends for large financial institutions to acquire independent financial advisory and wealth management businesses as the regulatory burden on these businesses increase. I don’t think it implies much for their strategy, but rather illustrates the industry trend towards further consolidation in retail financial planning and wealth management businesses.”
Ian Cruickshanks, an independent analyst, said: “It is difficult to say at the moment because it is too early to tell if they have made the right choice in acquiring the firm. But 49 percent is quite a big stake to hold and it shows commitment from their side.”
“My view is that it is a very positive move and it means they are confident about the business they are acquiring. The fact that they are prepared to put money in the economy and acquire has set a good example for other companies to follow.”
An analyst who chose to remain anonymous said: “The size of the transaction was not disclosed, but I expect it to be very small in Sanlam’s life. It is unlikely to have a material impact on their broader strategy.”
Sanlam shares fell 0.78 percent yesterday to close at R61.40 on the JSE.
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