Johannesburg – The 27four Investment Managers’ 2019 edition of BEE.conomics, an annual survey aimed at gauging the rate of transformation in the asset management sector, showed that assets managed by black firms surged 18 percent from last year to R579 billion.
This is still way below the more than R4.5 trillion managed by the savings and investment industry. None of the top 10 asset managers in South Africa is black-owned.
Akona Mlamleli, investment executive at 27four Investment Managers, said the results of the survey showed that merger and acquisition activity has increased across the sector, with established firms doing deals to become black-owned and transforming their investment team composition.
“This is a positive signal of normalisation within the asset management sector,” Mlamleli said.
Taquanta Asset Managers, iAluwani Capital Partners, Mazi Capital, Mergence Investment Managers, Argon Asset Managers and Vunani Fund Managers are regarded as the foremost black-owned asset managers in the country.
Some of the reasons advanced for low black participation in the asset management industry include a product offering focused mainly on specialist mandates, low penetration in the unit trust market, and trustees’ preference for well-known managers.
Fatima Vawda, the managing director at 27four Investment Managers, said black-owned asset management firms were introducing product offerings that cater for increased interest from institutional investors towards real assets such as infrastructure and private equity.
“From the peak of the ‘Ramaphoria’ era to the end of June 2019, foreigners have been net sellers of both South African equities and bonds to the tune of R85bn and R75bn respectively. Over the same period, volumes traded on the JSE have fallen by a staggering 44 percent and performance has been sub-par,” Vawda said.
“This structurally low-growth environment has spurred the appetite of institutional investors towards real assets such as infrastructure and private equity in search for returns that can immunise long-term liabilities. This has seen a resultant increase in the number of black-owned asset managers introducing product offerings to cater for this need.”
The latest Southern African Venture Capital and Private Equity Association (Savca) Private Equity Industry Survey showed that the industry had R171bn in funds under management as of December 2018, representing a compound annual growth rate of 9.3 percent since 1999.
The survey further showed that R12.8bn was raised in 2018, R7.1bn of which was raised locally.
Tanya van Lill, the chief executive of Savca, said the organisation was excited to see the positive trend of female and black professionals in the private equity industry.
“The exciting new Fund Manager Development Programme – a Savca initiative that aims to accelerate the entry of black and women-owned fund managers – is committed to driving a transformative change in the industry over the coming years,” Van Lill said.