Doing it his way
Like Frank Sinatra before him, Investec’s longtime CEO, Stephen Koseff, is on a farewell tour, and like Sinatra it is hard to believe it is the final curtain. He isn’t going until at least July in any case, perhaps later if the Investec Asset Management unbundling is delayed. The authorities may then force him to come off the Investec board for a “cooling-off period” before he rejoins as a nonexecutive.
I managed to see Koseff in his favourite coffee shop, Migali in Oaklands, without his usual overpaid PR minders. He usually does the first two meetings of the day at Migali to get away from these hangers-on, and now that he has stepped down as CEO it has become his de facto office. Koseff says he won’t follow his old friend and client Brian Joffe and set up a new listed holding company. But he is on the board of Bidcorp as well as the Bud Group, Investec’s partly owned private equity shop. He also plans to devote time to the Youth Employment Service. He is well aware that corporates have been net shedders of jobs — the focus will be on rural job creation.
He has bought one of the prime properties at Houghton Golf Club and manages to work up some enthusiasm about golf. He still plays, but because of tennis elbow he has not done so for several months.
Koseff shows most enthusiasm when recounting how he built Investec. He says it doesn’t make a fuss about calling itself a digital bank, but it has run on a branchless basis since 1998.
When he joined in 1978, part-time at first, it was a small business, leasing equipment and cars and selling the paper to asset finance businesses such as Wesbank. And Koseff never worked for anyone else after completing articles at Shorts Fine. Grander competitors such as UAL (where are they now?) used to look down on Investec as it focused on unfashionable lending to doctors and accountants, once it got its banking licence in 1980. It took time to get into institutional businesses such as asset management and corporate finance. But it filled some gaps through the acquisition of Metboard in 1985, allowing it to move into property funds and equity unit trusts, and of institutional investor Sechold in 1992.
Separating interests
Koseff says he learnt the lesson that the banking and fund management interests had to be kept separate. Perhaps his best acquisition was the fiercely independent Hendrik du Toit (in 1991), who set up Investec Asset Management in Cape Town
With hindsight, Koseff says he would not have facilitated Mzi Khumalo’s disastrous purchase of mining house JCI, using the Saflife vehicle which Investec effectively controlled.
He would not have sold the Israeli broking business, which is now the largest broker to Us-based Israelis.
And the number one mistake has to be the purchase of UK mortgage lender Kensington in what seems like nanoseconds before the global financial crisis. Koseff says that unlike much larger banks, Investec did not have to go back to shareholders to bail it out of its mess. It has taken the pain unwinding its legacy loan book over a decade. These mistakes have cost Investec, one of the go-to shares of the 1990s. Since 2000 it has disappointed investors, especially relative to more home-based groups such as PSG. Perhaps without Koseff and his longtime sidekick Bernard Kantor, Investec will seem less of a maverick shop.
Just look at the name of the new chair, Perry Crosthwaite. Sounds like one of those speciality tonic waters.
Koseff says he won’t follow his old friend and client Brian Joffe and set up a new listed holding company