Fund to help firms

Magda Wierzycka of Sygnia plans to launch an activist fund next month, intended to effect positive change at listed companies and profit off their rehabilitation.

She believes directors of such companies would likely work with the fund than risk exposing themselves to negative publicity.

“In the last year, I’ve come across so much corporate governance abuse in South Africa [...] .and I’ve done a lot of deep-diving into a number of these issues. I think that there is space for launching a fund which focuses specifically on these companies and engage with management in a positive manner to effect change,” the chief executive of Sygnia said.

The fund, to be added to Sygnia’s product offering, will see the financial services company buy shares in listed companies that are trading at deep discounts to net asset value, or which it perceives to have either a weak strategy, weak management team or weak corporate governance.

It will then engage with management to effect positive change and profit off its position in the stocks once such change is effected, marking a divergence from passive management.

“I think there is a lot of scope to create value and add value to shareholders by becoming an activist investor,” she said referring to what she termed her involvement in having the CEO of Net1 replaced through writing about the company.

She also said her engagement with JSE management at the group’s recent AGM is an illustration of what can be achieved.

The fund would not have to be a majority shareholder in the said companies to successfully engage with management and the board of directors would likely work with them than risk exposing themselves to negative publicity or to pointed questions at AGMs.

Wierzycka told Moneyweb that she will not be the fund portfolio manager fund.