Ben Kodisang on the state of life business-owned asset managers

Ben Kodisang could have started with traditional wealth management – he was the first black member of the Liberty Asset Management investment team when he joined in 1996 – but he is now a prime mover in the alternative sector.

Hans Alt Capital Partners operates three funds: a real estate fund with social impact, with investments in convenience shopping centers based in areas that have little exposure to the formal retail sector; a private equity fund in partnership with the Black Management Forum; and an infrastructure transformation fund.

His main role is to raise capital, design governance and secure land. He is well qualified for this, as his longest stay in seven years in his varied career drove Old Mutual Property.

Kodisang is grateful for his grounding in accounting. He wrote his articles at Ernst & Young, but said he did not have the personality to be an accountant.

Kodisang was able to join Libam as it had reduced its minimum age, but “I do not think I was recruited as part of a positive special treatment program. In 1996, only a few companies had become accustomed to the transformation imperative. ”

“There were very few black leaders at the time. Those who stood out were Adam Ebrahim at Allan Gray (later Oasis), Asief Mohamed at Metropolitan, Shams Pather at Real Africa and Imtiaz Ahmed at Fedsure.”

Times have changed, but perhaps not as much as they should.

“If you were dropped into today’s investment world of 1996,” Kodisang said, “you would notice a significant difference.”

“There has been a transformation at all levels, especially the lower levels. But I’m worried that there are not enough black people on the production side (investment teams) with transformation strongest in business development, operations and management. ”

Corporate culture

Liberty threw assets when Kodisang joined. Its value style outperformed the growth components of what we now call the boom of the late 1990s.

“Allan Gray stuck to the knitwear and remained invested in outdated old finance stocks,” Kodisang said, “but Liberty decided to take the risk down by moving into the more fashionable IT and niche finance stocks. Much of the value recovery was missed. ”

After Liberty, Kodisang joined Prodigy – a startup run by former Investec marketing talk show Robbie Alexander. It was one of several black-owned majority leaders that started at the turn of the millennium. It was positioned as a growth leader, primarily focused on small caps and perceived growth sectors of the time, such as the media.

It also had some credible shareholders, such as New Africa Investments Ltd – the oldest black economic empowerment consortium in South Africa – Union Alliance Holdings and Pontso – a women’s investment group led by veteran organizer Irene Charnley, later a prominent director at MTN.

The second article in this series can be seen here: Genius and luck in wealth management

“Prodigy did not have many chances to survive after the Asian crisis of 1998. There was an escape to quality and the small-cap boom came to an end,” Kodisang said.

He has worked for all three major life insurance-owned asset managers: Old Mutual Investment Group, Sanlam Investments and Stanlib.

“Unfortunately, it is likely that these companies will lag behind when it comes to winning third-party businesses. There is little chance of building a strong corporate culture to compare with, for example, what Hendrik du Toit has built on Ninety One. There is too much restructuring, and there have been too many changes in the management of the life office-owned stores. ”

“And even though these stores give shine in the game through a form of phantom equity, investment professionals will never feel like they actually own the business. It’s not the same emotional as owning their own business.”

Identification of a benefit

Kodisang, under his mentor Thabo Dloti, was asked to administer the separation of the unitary Old Mutual Asset Managers and later Stanlib into separate stores. In both cases, the boutique model was reversed, and both now have a combined equity and balanced unit – not so different from when the boutique model started.

But he says the life office-owned asset managers, through their balances, have an advantage in alternatives like equity funds and infrastructure funds.

“Maybe not so much in direct ownership, where it’s best to operate independently without interference from a head office.”

Kodisang left Old Mutual Properties in 2011 after his executives overruled the listing of the Triangle Property Fund, which housed its large retail and office properties.

“Top management was not sure of the prospects for the listed real estate market, which had been in a bull phase since 2003. But this bull market still had seven years left to run.”

He said Triangle would undoubtedly have been considered a blue chip in the sector.

“We owned the largest shopping mall in the country – Gateway in Umhlanga – as well as Cavendish Square in Cape Town, Menlyn in Pretoria [at the time] and The Zone in Rosebank, Johannesburg. ”

Increasingly, he said, his interest shifted from his roots to stock picking in public markets to general management and the alternative field. In 2016, he was given the opportunity to monitor Sanlam’s entire alternative asset package, from hedge funds to unlisted real estate, private equity and the African activities.

“Sanlam was quite envious of what Old Mutual had achieved in alternatives under Paul Boynton. It is still catching up, and so is Stanlib. ”

Although Kodisang is only 51, he says it is highly unlikely he will work for a company again. “I can now use my experience and knowledge in my business. I have promised to stay 10 years and be able to extend it for five years after that.”

Stephen Cranston is a journalist at Citywire, which provides insights and information to professional investors globally.

This article was first published on Citywire South Africa here and republished with permission.

Leave a Comment

%d bloggers like this: