Retail rethink on cards at Alexander Forbes?

SA’s largest pension fund administrator, Alexander Forbes, is going through tough times, with a seemingly revolving door in its C-suite, a struggling share price and a badly executed strategy.

The business is looking for fresh direction in a market that has not favoured the pension specialist since its relisting on the local bourse more than four years ago.

Traditionally, the company has serviced institutional clients through its asset management and consulting business, but recently added more emphasis on growing retail clients that “has been met with scepticism”, said Warwick Bam, an analyst at Avior Capital Markets. A long list of strategies The retail strategy is but one in a long list of strategies touted by a series of CEOs in recent years.

The most recent reshuffle was the ousting of Andrew Darfoor as its head last month, just two years into the job. It is a decision that he has taken to arbitration.

The board quickly replaced him with Dawie de Villiers, head of Sanlam Employee Benefits, to steer the company, which manages about R357bn, in a new direction.

Darfoor crafted the Ambition 2022 strategy, a five-year growth plan meant to see the pension specialist increase its return on equity to shareholders to 14%, up from 2%, among a host of large targets set from 2017 onwards.

On the day of Darfoor’s axing, the market reacted positively, with the counter rising 8% in intraday trade, the most significant rise seen in three months.

Darfoor is not the only departure from the executive team, with the Sandton-based company announcing earlier this week that its chief financial officer, Naidene FordHoon, would be leaving at the end of the year.

De Villiers is the third CEO since the company listed in July 2014, and points to yet another strategy shift.

Edward Kieswetter, Darfoor’s predecessor, took early retirement in February 2016 after six years at the helm.

One of the reasons ascribed to the collapse of the company’s most recent strategy has been a misunderstanding of the African business landscape.

"Certain elements of their strategy have worked in the UK and other markets but were perhaps not suited for their position in the South African market,” Bam said. |

Darfoor took the reins in September 2016, having previously been with Old Mutual and Credit Suisse Europe.

The new CEO, De Villiers “is likely to refine the focus of Alexander Forbes back to institutional investors”, said Bam.

Though some analysts have said Alexander Forbes was a good investment, with both Avior and Afrifocus Securities rating the stock positively, the market differed.

From its peak in February 2015, the stock is down 51% to date, according to Bloomberg data, and from its listing it is down 39%. Over the same period, rivals such as Discovery and Sanlam are up 69% and 21% respectively, with Liberty in negative territory, down 5.6%.