Bridge Fund Man­agers sees po­ten­tial in grow­ing its as­sets

The Star Early Edition - - BUSINESS NEWS - Siseko Njobeni

BRIDGE Fund Man­agers, for­merly known as Grindrod As­set Man­age­ment, wanted to grow as­sets un­der man­age­ment from the cur­rent R14.5 billion to be­tween R60bn and R80bn in the next three to five years, Bridge ex­ec­u­tive di­rec­tor and head of fund man­age­ment Paul Ste­wart said yes­ter­day.

The com­pany on Mon­day an­nounced a deal that would re­sult in in­vest­ment com­pany In­fini­tus Hold­ings tak­ing a 76 per­cent stake in Bridge.

In­fini­tus is fo­cused on high­growth busi­nesses in the con­sumer, in­dus­trial and fi­nan­cial ser­vices sec­tors. At the end of De­cem­ber 2016, Grindrod As­set Man­age­ment had as­sets un­der man­age­ment of R14.5bn.

Ste­wart said Bridge wanted to in­crease the as­sets un­der man­age­ment and grow rev­enues through ac­cess to more re­tire­ment funds, re­tail in­vestors and high net worth in­di­vid­u­als.

“We do not want to be the largest fund man­ager. Size only gives peo­ple com­fort. It does not nec­es­sar­ily trans­late into bet­ter in­vest­ment out­comes. In fact the op­po­site is true. The big­ger the fund, the more dif­fi­cult it is to per­form. This busi­ness can grow to be­tween R60bn and R80bn. That is doable in three to five years. We would not like to grow big­ger than that,” Ste­wart said.

Grindrod, through sub­sidiary GFS Hold­ings, would ex­change its en­tire Grindrod As­set Man­age­ment for In­fini­tus shares.

Fol­low­ing the trans­ac­tion, In­fini­tus would hold 76 per­cent of the eq­uity in Bridge Fund Man­agers, with man­age­ment and staff re­tain­ing the re­main­ing 24 per­cent in­ter­est.

After the trans­ac­tion, GFS would own 49 per­cent of In­fini­tus and there­fore Grindrod re­tains a ma­jor in­di­rect stake in Bridge Fund Man­agers.

“So Grindrod is not ex­it­ing, but chang­ing the way it holds its in­ter­est in the busi­ness. This is an im­por­tant step to free up the busi­ness to de­velop its own iden­tity as Bridge Fund Man­agers and pur­sue sen­si­ble growth op­por­tu­ni­ties while re­tain­ing its loyal client base,” GFS man­ag­ing di­rec­tor David Polk­inghorne said.

Ste­wart was buoy­ant about Bridge’s growth prospects as the com­pany was devel­op­ing its own brand and iden­tity out­side of the Grindrod fold.

“There has al­ways been con­fu­sion, be­cause Grindrod is known as a ship­ping com­pany, while we are in fi­nan­cial ser­vices,” he said.

Po­ten­tial clients

He said be­ing part of a big and listed group had its lim­i­ta­tions. Com­pa­nies in com­pe­ti­tion with Grindrod, which pre­vi­ously would not con­sider the com­pany, were now po­ten­tial clients. He said the com­pany also wanted to grow its foothold in the re­tire­ment funds space. On Fe­bru­ary 28, the com­pany would com­plete its full five-year track record.

“So far, that track record is good. That will al­low us to have a de­cent con­ver­sa­tion with the re­tire­ment funds,” he said. Be­ing on its own would also en­hance Bridge’s pur­suit of ac­quis­i­tive growth, in ad­di­tion to or­ganic growth. Bridge would ad­dress the ex­ist­ing “dis­con­nect” be­tween clients and as­set man­agers. Of­ten the fund man­agers achieved their tar­gets with­out nec­es­sar­ily meet­ing the clients’ needs, he said.

There were ex­pec­ta­tion, un­der­stand­ing and trust gaps, which of­ten led to mis­aligned out­comes, he said. “The in­dus­try earns its fees, how­ever, client’s in­vest­ment ob­jec­tives are of­ten not achieved. We aim to bridge the gap,” said Ste­wart.

Size only gives peo­ple com­fort. It does not nec­es­sar­ily trans­late into bet­ter in­vest­ment out­comes.

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