Asset Managers: More Are Listing

Over the past year there has been an appetite for asset managers to list on the JSE and the trend is set to continue.

In June last year Cape-based PSG Konsult made its debut on the bourse, having traded over the counter since April 2005. The PSG Konsult listing was followed by the Anchor Group in September.

Following in their footsteps, Sygnia Asset Management is scheduled to list on the JSE in October and plans to raise about R300m in its IPO.

A Johannesburg-based analyst says some owners of asset management businesses wanted to unlock value for themselves and as a result sold shares to the public. He says asset management is often linked to the performance of the stock market. With the stock market trading higher, money managers benefit as assets under management (AUM) grow, boosting revenue.

In the short time that it has been listed, Anchor Group has generated some extraordinary returns. Its shares were initially issued at R2 and this week were trading over R11. So far this year the Anchor shares are up about 62%.

Some are hopeful that when Sygnia lists it will generate similar growth. Sygnia has AUM of about R120bn and Anchor Group had AUM of more than R5bn at listing.

“This is definitely an asset worth considering if it comes in at the right valuation,” says Owen Nkomo, the founder of Inkunzi Investments. The fact that even Warren Buffett has endorsed passive investments means that Sygnia’s business model is critically timed. The challenge that shareholders will have to decide how to deal with is that business will be coming onto the bourse at a time when general valuations are deemed to be steep, he says. “But then again, valuations have been ‘steamy’ for over half a decade now and globally accommodative monetary policies mean that there is a bigger chance of markets staying elevated for longer.”

The PSG Konsult share has been stubbornly sitting at the mid-R7 level and has not gone back to the R8 it reached when it listed.