No clouding of issues in this lean business
With a brand-new firm and fresh investment vehicles, this entrepreneur is making it easier to invest in a selection of Africa’s biggest companies
At 30 years old, Maurice Madiba has set up SA’S first black-owned exchange traded fund (ETF) business and only its second black-owned collective investment scheme management company after African Collective Investments.
Madiba named his business after a critically acclaimed 2012 film, Cloud Atlas.
And yes, it was a firm he started in his mother’s garage, at the tail end of a successful spell at Deutsche Bank.
He worked for two years developing and refining the business. By then he had been saturated in the Deutsche way of approaching equities and contracts for difference. Before that he had worked as a research analyst at the private equity firm Convergence Partners. He had also attended the Thabo Mbeki African Leadership Institute.
He was a fellow of the Allan Gray Orbis Foundation, a large shareholder in venture capitalist E Squared. A year before Cloud Atlas listed, E Squared came on board as a financier. So it was logical for Madiba to turn to it for equity finance.
Cloud Atlas made its debut on the JSE in April. Its first product, in the African Market Index series, is the AMI Big50 ex-sa fund. This will soon be followed by the AMI Consumer and AMI Property funds. AMI Big50 tracks the top 50 listed companies in Africa outside SA.
Madiba says that as an ETF, as opposed to an exchange traded note (ETN), it has to hold the shares in the fund proportionately.
Investors in competing African ETNS will find that it offers only a promise to follow the index, and has no obligation to replicate it.
No country or sector is overrepresented in the portfolio. It cuts across 15 African markets. Nigerian banks, which often dominate these indices, are represented by Guaranty Trust, Zimbabwe by cellphone provider Econet and brewer Delta, and Kenya primarily by Kenya Commercial Bank and Safaricom.
Cloud Atlas has a team of just four and is based in Rosebank, Johannesburg. Madiba can keep it lean, as he is able to outsource most of the functions: RMB is trustee, Maitland is fund administrator while Thomson Reuters maintains the index and does the appropriate calculations. But finance, much of the analytics and business development remain in-house.
Madiba says it will not be an easy product to manage. Unlike regular Africa unit trusts, it can’t be gated — Cloud Atlas can never refuse to let anyone in or out of the fund.
What Madiba doesn’t tell you is that the movie Cloud Atlas, which starred Tom Hanks and Halle Berry, might have wowed the critics, but it was a commercial flop.
Thus far, his version of Cloud Atlas has impressed the critics. Since Madiba’s Top50 fund launched on April 20 it has been the second-best international ETF on the JSE, after Sygnia Euro, with a 17% return. The Cloud Atlas fund has declared its second dividend and it has a 3% yield. Raising assets has proved tougher, but it has grown from an initial R2m to R14m. But is the business too specialised for the SA public?
We’ll soon find out.