The executive team of Investec Asset Management plan to boost their shareholding in the business after paying about $280 million for a 15 percent stake, according to Thabo Khojane, managing director of the unit.
“We’ll have 20 percent by 2020 and hopefully more than that after that,” Khojane said in an interview in Cape Town yesterday, referring to an option to increase the stake. “We’d love to buy more and the shareholder would love to sell less. The 20 percent is as a result of that kind of balancing act.”
Investec Plc, the owner of a bank and money manager in South Africa and the U.K., said on March 14 that senior employees of its asset-management unit would buy the 15 percent stake for 180 million pounds. Staff have the right to boost that by another 5 percent over seven years. The buyers are led by Investec Asset Management head Hendrik du Toit and comprise about 40 senior managers and employees.
In three years the money manager, with $105 million in funds under management, can start to take up the next 5 percent and the individuals who have taken on debt to fund the deal “should be in the money before 10 years is up,” Khojane said.
Investec, which is listed in London and Johannesburg, is the best-performing bank stock in South Africa this year having gained 16 percent to 68.05 rand.
“The Investec group is the kind of parent you want as an independently-minded group,” Khojane said. “In our industry there’s a premium for leadership continuity.”
The asset manager is likely to attract between 1.8 billion pounds and 3.5 billion pounds of net inflows a year for the next three years, Greg Saffy, a banking analyst for RMB Morgan Stanley in Johannesburg, said in an April 29 note to clients. Operating profit will likely rise to 172 million pounds by 2015 from 127 million, he said.
While Johannesburg’s stock exchange has underperformed bourses in London, Tokyo and the U.S. this year and the price of gold, in which the money manager has overweight positions, has plummeted more than 12 percent, so-called short-term market changes shouldn’t affect employees’ ability to realize a return, according to Khojane.