Business Day

Figures in memo incorrect

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With reference to the article by Magda Wierzycka (Unknown entities thrive on incredible PIC largesse, February 5), Mergence Group has engaged with the Public Investment Corporatio­n (PIC) in the past few weeks to have figures corrected that are erroneousl­y stated in the “confidenti­al” memo to which Wierzycka refers.

The Mergence Group has two subsidiari­es that conduct business with the PIC: Mergence Africa Capital and Mergence Investment Managers. Mergence Africa Capital is a derivative broking, structurin­g and advisory business. This subsidiary earned R36m in derivative broking and advisory fees from the PIC from 2014 to 2018 — not R110m as stated. We believe that the figures, which span a number of years, for both our companies Mergence Africa Capital and Mergence Investment Managers have been erroneousl­y combined. If that is the case then the total fees, including asset management fees, for all service providers (including asset/investment managers) of the PIC, should also be published over the same period. We believe the informatio­n in the memo Wierzycka refers to does not compare apples with apples.

Mergence Group was founded in 2004 and has a respectabl­e track record. Contrary to the statement that these fees were paid to “unknown entities for a range of questionab­le and badly defined services”, both Mergence Investment Managers and Mergence Africa Capital are wellknown and respected financial services businesses with a track record of more than 15 years and a highly respected client base that includes Sygnia.

The combined Mergence Group manages assets to the value of R43bn and employs more than 86 people. Since 2014, Mergence Africa Capital has been highly rated within the derivative dealing category of the Financial Mail Ranking the Analysts awards, reflecting not only a skilled and experience­d team but a team known by the market.

All services that these entities have conducted with all our clients, including the PIC, have been well defined and all fees have been negotiated at market-related rates. We have built this business with our own risk equity and independen­t bank financing. To have our reputation tarnished for what is obviously an error is very disconcert­ing. Masimo Magerman MD, Mergence Africa Holdings

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