27four to buy Prescient Life

Financial services group 27four Holdings has entered into an agreement to buy Prescient Life from Prescient Holdings. While the deal is still subject to regulatory approval and certain suspensive conditions, 27four expects it to be finalised by August 1.

Prescient clients and the group will still be able to make use of the life licence to offer pooled portfolios. Prescient will continue to perform the administration through Prescient Fund Services.

27four chief executive Fatima Vawda says the deal puts her company on a path to building a meaningful, diversified financial services firm.

27four already owns an asset manager, wealth management business, umbrella fund and collective investment scheme management company. A life licence adds significant scope to its growth ambitions.

This is particularly significant as 27four is a pioneering blackowned business in this space.

As Vawda notes, it has been challenging for black-owned companies to own the means of doing business in the financial services industry.

“The normal vehicles that are used in the course of businesses we don’t own because they are too expensive and when we started out, we didn’t have the capital to have those vehicles,” she explains.

In the case of a multimanagement asset manager, such as 27four, the law stipulates there are only two ways in which a business can pool the investments of multiple clients.

The first is through a collective investment scheme management company, the second is to have a life company licence,” says Vawda.

While capital adequacy requirements are an important risk management mechanism, they do act as a barrier to entry.

That is one of the reasons regulations make it possible for smaller asset managers to operate co-named funds on another company’s manco licence, or to use the life licence of a bigger player.

Both are expensive and the adequacy requirements are hard to meet.

Fatima Vawda Chief executive 27four Holdings