Sygnia investor raises conflict of interest concerns as firm expects earnings growth
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CAPE TOWN – Asset management firm Sygnia said on Wednesday that headline earnings per share were expected to increase by between 86 and 105 percent for the six months to March 31, 2019.
The trading statement was released at about the same time that a Sygnia investor, who wished to remain anonymous, raised several conflict of interest concerns to Business Report about Sygnia, its management as well as a UK subsidiary Braavos.
Sygnia said in the trading statement that headline earnings were expected to be between 59 and 65 cents per share, compared with 31.7 cents at March 31, 2019.
The company intends to publish its annual results on or about June 10.
Last month Sygnia said David Hufton has been appointed as the joint chief executive of Sygnia, with immediate effect.
Hufton was previously deputy chief executive of Sygnia, and prior to joining Sygnia in February 2016, was a member of the executive committee of Alexander Forbes Financial Services for many years.
In March, Sygnia disclosed a number of “small” related party transactions between Braavos Investment Advisers in the UK, and Sygnia subsidiaries.
Braavos was registered in England Eales with two 50 percent partners, Sygnia joint chief executive Magda Wierzycka and Andre Crawford-Brunt, a non-executive director of Sygnia.
Braavos intended to enter into a services agreement with Sygnia Asset Management UK, (SAM UK), a subsidiary of Sygnia, for infrastructure, office space and other support, for which Braavos would pay an annual fee of about R13.9 million to SAM UK.
Then, Sygnia Life intended to make investments into Braavos Capital I Limited Partnership and Braavos Capital II Limited Partnership, which are venture capital/private equity funds registered in Guernsey. The aim of these investments were to maximise Sygnia Life returns for its stakeholders.
Braavos, Wierzycka and Crawford-Brunt would be appointed as the investment advisers and directors respectively of the funds.
The Sygnia investor claimed there were numerous conflicts of interest in these transactions that were of concern to him.
These related to fees on policyholders’ funds; the high fees being charged on policyholder funds (1.5 percent plus 20 percent performance fee) for what was essentially a passive investment; the fact that the fees could not be negotiated; the fact the policy holders were investing in high-risk venture capital funds; why the establishment of Braavos had not been disclosed to shareholders, and the conflicts of interest in the directorships of Sygnia and Braavos.
Sygnia said on Wednesday in response to questions on these matters that “unfortunately there is no comment or feedback at this stage”.
This month Wierzycka, according to media reports, announced she had bought shares in OSI, a company that transforms patents from Oxford University into viable businesses.
Sygnia’s share price was up by 16.05 percent closing at R9.70 a share on the JSE on Wednesday.