TIPPING POINT AT STANLIB
Thabo Dloti needs to restore confidence
THABO DLOTI KNEW he was taking on a big job when he quit Old Mutual’s OMIGSA to run Stanlib, the asset manager owned by Standard Bank-controlled Liberty. Five months into Dloti’s tenure and pressure is mounting on him to not only inject some much needed stability into an unmotivated investment team but also restore the confidence of investors and the broker community amid mounting concern about the growing workload on existing staff and falling service standards. Some third party funds are leaving the business.
Says Dloti: “We’re making progress. Liberty wouldn’t have appointed me if they didn’t want change. I’ve made several proposals to them already and they haven’t rejected any of my plans. But they’re a questioning leadership and need comfort that what we’re proposing makes sense.”
These proposals include a greater centralisation of high level decision-making, clarity about the firm’s role within the broader Liberty Group and developing an unambiguous investment process.
When Dloti took over, morale at Stanlib was already poor. He’s critical of the lack of discipline, systems and procedures he found when he took over. Where there were procedures in place, staff had lost faith in them, because the numerous leadership changes that had beset the firm had led to constant change – particularly over the past 18 turbulent months.
Previous CEO George Brits had been offered a demotion. He quit instead, and Liberty – which controls 100% of the asset manager – parachuted an interim management team in while it figured out what to do with the business. It installed various interim measures and strove to get the ship back on an acceptable course. Performance in 2008 had been shocking, with half the bottom 10 performing unit trusts coming from the Stanlib stable. A radical overhaul was needed.
But in the interim, as the flow of analysts and fund managers leaving the building increased, so did the nervousness of its third party clients. To date, the biggest single withdrawal of funds has come from the Public Investment Corporation (PIC), which is believed to have extracted half of its investment entrusted to Stanlib – around R5bn. At end-March, Stanlib had around R330bn under management: that was before the PIC’s withdrawal and recent market pressure, implying the amount of money held by the firm on behalf of clients will decline for the six months to end-June.
Unlike many boutique investment companies, Stanlib has the support to survive its current turmoil, courtesy of its shareholding. Around 35% of its assets under management come from Liberty in the form of life and other policy investments, 40% is unit trust business, while pension funds and LISPS make up the balance.
“Clients do get concerned,” concedes Dloti. “But most of them are on board. I’ve spoken to them. The frustration of this business is there are fundamental, basic principles about which there are uncertainties. I have to resolve those. The delegation of authority hasn’t been clear, decision-making hasn’t been clear, the fees we charge haven’t been clear,” says Dloti. “Even remuneration has been unclear and communicated haphazardly. The organisation hasn’t been disciplined about what it does.”
Those are hard-hitting words from the new CEO, who is starting from a relatively low base and has a point to prove. After a successful tenure in developing OMIGSA’s boutique model, Dloti wants to use that experience to rejuvenate Stanlib.
But it was always going to be a tricky proposition. Stanlib was born out of the merger of seven Standard Bank and Liberty business units in 2003: each company