Allan Gray Gives Away Control of Money Manager to Charityby
Foundation may reap hundreds of millions of rands in dividends
Funds to be used for philanthropic purposes, Gray says
Allan Gray has given his family’s controlling stake in the fund manager bearing his name and its offshore partner, Bermuda-based Orbis Group, to a charitable foundation in an unprecedented move for a South African investment company.
Control of the business has been transferred to the Allan & Gill Gray Foundation and dividends will be used for philanthropic purposes, Gray said in a newsletter to clients dated Dec. 31, without giving details of the size of the transaction. Patrice Motsepe, chairman of African Rainbow Minerals Ltd. and the richest black South African, in 2013 pledged some of his wealth to charity, joining initiatives by Warren Buffett and Bill Gates to boost philanthropy.
“If we are able to continue to do a good job for clients and retain their trust and confidence then I would expect those dividends to be measured in hundreds of millions of rands rather than tens of millions of rands,” Ian Liddle, chairman and chief investment officer at Allan Gray, said by phone from Cape Town. Gray “wants our businesses to continue to thrive and he thinks that this is a governance structure which will allow our businesses to continue to thrive,” Liddle said.
Allan Gray Ltd. oversees about $29 billion and has an empowerment company, a staff share trust and some executives as minority shareholders, Liddle said, without disclosing the value of the company. Orbis manages about $20 billion for clients, he said. The company was South Africa’s fourth-largest money manager in 2014, according to a survey of retirement funds by Alexander Forbes Group Holdings Ltd.
Gray, who turns 78 in April, said in the newsletter he had stepped down as chairman of Orbis to focus on the foundation. A Harvard Business School graduate, he founded Allan Gray Investment Counsel in Cape Town in 1973 and served as chief executive officer for 15 years before starting Orbis in 1989. He lives in Bermuda.
The foundation’s mandate “is to ensure that the fruits from its controlling interests in Orbis and Allan Gray are ultimately devoted entirely and exclusively to philanthropy in keeping with the family’s long-held intentions,” Gray said. “We consider this both the right thing to do and a small but necessary contribution toward a society full of hope for all humanity.”