Sunday Times

Absa to un­veil BEE buyer for as­set unit

Abam re­spon­si­ble for R135bn in­vest­ments; just out­side top 20

- By STEPHEN CRANSTON cranstons@fm.co.za

● Absa will soon an­nounce the sale of 51% of its as­set man­ager to a BEE busi­ness. The iden­tity of the buyer has been kept se­cret, but one op­tion could be the Pa­trice Mot­sepe­owned African Rain­bow Cap­i­tal.

Names such as Mazi Cap­i­tal, AMB Hold­ings, Aluwani and Sphere Hold­ings have also all cropped up.

Not all the R319bn man­aged by Absa will be in­cluded, just the in­sti­tu­tional busi­ness Absa As­set Man­age­ment (Abam), which has R135bn un­der man­age­ment. The R67bn money-mar­ket fund, which is re­ally a bank­ing prod­uct, will be man­aged by the bank.

The sale is not on the same scale as the split at In­vestec be­tween its in­sti­tu­tional as­set man­ager and the rest of the group, but it is very much part of the same theme.

And it fol­lows non­core dis­pos­als over the past two years such as the sale of Absa Con­sul­tants & Ac­tu­ar­ies to San­lam, the sale of its short-term in­sur­ance bro­ker­age to PSG, and the sale of its com­mer­cial in­ter­me­di­ated short-term un­der­writer to San­tam.

Abam with­out the money-mar­ket fund would be just out­side the list of top 20 man­agers, be­low Abax and Pre­scient as well as Taquanta, the largest BEE man­ager. But it would be ahead of Ash­bur­ton’s listed mar­kets busi­ness.

Absa spokesper­son Songezo Zibi says the bank is in the process of build­ing a “win­ning” wealth, in­vest­ment man­age­ment and in­sur­ance busi­ness that will be able to lever­age off the strengths of the re­tail and busi­ness bank­ing op­er­a­tions.

“In our in­sur­ance busi­ness, the bulk of the leads are pro­cessed by the bank, as in­sur­ance is added to ve­hi­cle fi­nance, per­sonal loans and mort­gages.”

There isn’t the same syn­ergy be­tween the bank and the as­set man­ager — there are heavy re­stric­tions on un­qual­i­fied ad­vice which make it im­prac­ti­cal to dis­trib­ute unit trusts in bank branches.

The new share­hold­ers won’t be buy­ing a cash cow. It made just a por­tion of the R170m for which the in­vest­ment clus­ter was re­spon­si­ble in the six months to June. But un­der Ann Leep­ile, the group has had some strong per­form­ing funds. She says the Core In­come and Bond funds are both do­ing well, and in eq­uity funds Prime Eq­uity stands out.

The big­gest dis­ap­point­ment has been the col­lapse of Absa’s prop­erty fund man­aged by Fayyaz Mot­tiar, which was highly ex­posed to the trou­bled Re­silient group.

It makes sense for the bank to keep other parts of the clus­ter, such as the mul­ti­man­ager run by Jonel Matthee-Fer­reira. This de­signs “so­lu­tions” for Absa’s army of fi­nan­cial ad­vis­ers.

The unit trust man­age­ment com­pany is also un­likely to be part of the deal, nor linked in­vest­ments. BEE links ap­pear to make lit­tle dif­fer­ence to the af­flu­ent clients of these prod­ucts.

Once this deal is out of the way, Absa’s re­tail and busi­ness divi­sion will ab­sorb the wealth in­vest­ment, man­age­ment and in­sur­ance divi­sion and op­er­ate as an in­te­grated busi­ness.

This will be an­other step up in the ca­reer arc of the am­bi­tious head of re­tail and busi­ness, Ar­rie Raut­en­bach.

Absa seems to be play­ing down its ex­per­tise in pri­vate-client fund man­age­ment, though this divi­sion is un­likely to be part of the BEE deal. In the past it boasted — pre­sum­ably with his per­mis­sion — that it pro­vided per­sonal and cor­po­rate bank­ing ser­vices for the now dis­graced for­mer CEO of Stein­hoff, Markus Jooste. That boast has not been heard for a while now.

Re­tail banks have never been good own­ers of as­set man­agers. Ned­bank’s at­tempt to merge UAL and Syfrets was the worst ex­am­ple of in­com­pe­tence, but nei­ther Stan­dard Bank nor FirstRand have been able to make it work in the long term ei­ther.

Absa closed down its as­set man­ager in the 1990s be­cause the per­for­mance was so bad, then set up a short-lived BEE joint ven­ture in Cape Town called Ab­vest. It had a few star man­agers but a high cost base and a poor re­la­tion­ship with the rest of group.

At least Absa has some­thing to sell in the cur­rent Abam, which could be the core of a good BEE man­ager — much as parts of the old RMB As­set Man­age­ment have set­tled into Aluwani.

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