Vunani Ltd feels Man­gaung pinch

Finweek English Edition - - INSIDE - Garth The­unis­sen gartht@fin­week.co.za

Vunani Ltd’s re­sults for the fis­cal year end­ing 31 De­cem­ber show just how pol­i­tics can plague busi­ness i n South Africa.

The di­ver­si­fied fi­nan­cial ser­vices group de­liv­ered a mere 1% rise in rev­enue to R107.89m in the pe­riod un­der re­view. Its cor­po­rate fi­nance and trans­ac­tions ad­vi­sory op­er­a­tions op­er­a­tions (listed un­der ‘ad­vi­sory ser­vices’ in the re­sults state­ment) were par­tic­u­larly hard hit due to a re­luc­tance on the part of its pub­lic-sec­tor clients to ap­prove ex­pen­di­ture ahead of the ANC’s elec­tive con­fer­ence in Man­gaung last year. Vunani Ltd’s re­sults show that rev­enue from its ad­vi­sory ser­vices di­vi­sion slumped a mas­sive 76% to R5.3m with the unit also de­liv­eri ng a cu­mu­la­tive l oss of R6.23m com­pared with a R5.3m profit the pre­vi­ous fi­nan­cial year.

“Our f l at rev­enue was really due to t he cor po­rate f inance di­vi­sion. Work, par­tic­u­larly from the pub­lic sec­tor, was a bit slow,” man­ag­ing di­rec­tor, Bu­tana Khoza, told Fin­week in a tele­phone in­ter­view. “There was gen­er­ally a sense of trep­i­da­tion and re­luc­tance to ap­prove trans­ac­tions ahead of the Man­gaung con­fer­ence last year. That really hurt us.”

Vunani’s ad­vi­sory ser­vices arm is heav­ily re­liant on con­sul­tancy work to Sta­te­owned en­ti­ties such as Transnet and South African Air­ways on mat­ters such as bond is­suance, re­struc­tur­ing and cor­po­rate trans­ac­tions. Khoza says the firm plans to in­ten­sify its ef­forts to di­ver­sify rev­enue streams to re­duce its re­liance on the pub­lic sec­tor go­ing for­ward.

“We weren’t the only ones who felt the pinch – con­struc­tion firms have also been com­plain­ing about the slow pace of spend­ing from Gove r n ment , ” says Khoza. “There’s too much red tape in­volved but our view is that there’s a lot of other work out t here. It ’ s about di­ver­si­fi­ca­tion.”

Two of the di­vi­sions that the firm is pin­ning its hopes on are as­set man­age­ment and listed prop­erty. Vunani’s As­set Man­age­ment unit, which op­er­ates un­der the ban­ner of Vunani Fund Man­agers, has man­aged to grow the value of the funds it over­sees by 69% to R11.8bn since it was ac­quired from Pere­grine al­most two years ago. The bulk of the firm’s as­sets un­der man­age­ment are from in­sti­tu­tional clients but it aims to grow its re­tail de­posits as well.

“As­set man­age­ment is a strong pil­lar for us and we think it’s go­ing to be a big busi­ness in years to come,” says Khoza.

Vunani Ltd also has big plans for its sep­a­rately listed Vunani Prop­erty In­vest­ment Fund, whose com­mer­cial off ice port­fo­lio is cur­rently about R1.3bn in size. Khoza says the firm aims to grow that to al­most R4bn by the end of next year.

“We want to bulk up our prop­erty port­fo­lio by up to two to three times over the next 18 months,” says Khoza.

The com­pany has also opened a trans­ac­tions ad­vi­sory of­fice in Zim­babwe un­der the aus­pices of An­drew Mur­ray, him­self a cit­i­zen of that coun­try. Khoza says there is a lot of scope for Vunani to use its track record in ad­vis­ing on Black Eco­nomic Em­pow­er­ment trans­ac­tions in its home mar­ket to ad­vise on indi­geni­sa­tion ef­forts in Zim­babwe, par­tic­u­larly to South African clients who are in­creas­ingly look­ing to en­ter the coun­try now that its econ­omy has sta­bilised.

“Zim­babwe of­fers a lot of op­por­tu­nity but it won’t be a sub­sti­tute for the sort of vol­umes we do in South Africa,” says Khoza. “Our view on the coun­try is more of a long-term one.”

Bu­tana Khoza

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