OMIGSA expansion makes Futuregrowth one of SA’s largest bond houses

Old Mutual Investment Group (SA) (OMIGSA), a subsidiary of Old Mutual South Africa,Futuregrowth Asset Management (Futuregrowth) and black empowerment group WIPHOLD are pleased to announce that OMIGSA has agreed to purchase WIPHOLD's 69% shareholding in Futuregrowth, subject to the approval of the competition authorities.

As a result of the transaction, OMIGSA’s Fixed Income Investments boutique will merge with Futuregrowth’s fixed income team under the Futuregrowth brand to create what will be o­ne of the largest and strongest fixed income asset managers in South Africa, with 16 investment professionals and almost R100bn in combined assets under management.

Futuregrowth will remain a separately operating asset management company and legal entity, joining the suite of 12 specialist investment boutiques in the OMIGSA stable. It will continue to operate from its Newlands offices in Cape Town.

Since its inception in 2000, Futuregrowth has built up a respected brand name and highly regarded team of skilled professionals in South Africa’s financial market, providing a unique offering that has proved highly attractive to clients. Futuregrowth will retain this brand and will focus o­n fixed income and socially responsible investments.

In line with OMIGSA’s focus o­n specialisation, the Futuregrowth equities team will form a separate capability within OMIGSA managing equities using an active quantitative approach, including the renowned Futuregrowth Albaraka Equity Fund.

OMIGSA CEO Thabo Dloti said that Futuregrowth’s specialist capabilities would complement and enhance those of OMIGSA. "Futuregrowth has emerged as o­ne of the leading specialist asset managers in South Africa in the areas of fixed interest, quantitative equity and socially responsible investments, and we appreciate the benefits of keeping the business focused and unique, in line with our boutique model.

“We see our partnership with Futuregrowth as further validation of the attractiveness of our multi-boutique model, which has now been in place for 18 months,” added Dloti.

Futuregrowth managing director, Paul Rackstraw, said that the company is at a point in its evolution where a strategic alliance with a strong partner such as OMIGSA will be beneficial to its success. “We recognise the leverage we will enjoy in areas including research, shared services such as procurement and the benefit of OMIGSA’s retail distribution channel.” He pointed out that the increase in scale would considerably enhance the products offered.

Gloria Serobe, Executive Director of WIPHOLD, stressed that the group has always placed a high value o­n their investment in Futuregrowth. "We consider it an excellent business and brand, and given our interest in Old Mutual we are excited about the enormous value-add we know Futuregrowth will bring to OMIGSA’s boutique strategy. We are pleased that, through our relationship with OMIGSA, we will be able to stay close to Futuregrowth and track their progress in the future.”

The Futuregrowth boutique

OMIGSA’s Fixed Income team, comprising seven investment professionals led by Wikus Furstenberg with assets under management of approximately R80bn, will merge with their counterparts in fixed interest at the Futuregrowth offices. Paul Rackstraw will continue in his role as managing director of Futuregrowth, while Andrew Canter, a director of Futuregrowth and investment committee chairman, will fulfill the role of chief investment officer.

Rackstraw explained that the teams have complementary capabilities and offerings: the OMIGSA team is strong in the conventional fixed and enhanced income space, while Futuregrowth is a leading player in the credit market, focusing o­n unlisted and corporate debt, with R14 billion under management. “Going forward, we envisage that the investment products offered by the new Futuregrowth boutique will be enhanced by the collective research, experience, skills and insights of the enlarged asset management team, to the benefit of all of our clients. The teams are excited about working together.”

Futuregrowth, which is recognised as o­ne of the premier Socially Responsible Investments (SRI) asset managers in South Africa, will continue to play a leadership role in nation building by offering retirement funds access to infrastructure, retail property and other development deals. Its flagship SRI funds include the Futuregrowth Infrastructure & Development Bond and Equity funds, the Community Property Fund and the ethical suite of Shari'ah-compliant funds.

Quantitative equities

Futuregrowth equities is recognised as a pioneer of active quantitative investing in South Africa. With about R20bn in assets under management, their 10-person team will relocate to OMIGSA’s offices in Pinelands as a stand-alone capability. OMIGSA is committed to further developing this investment style within the South African landscape. In addition, the Old Mutual Group has a number of leading active quant boutiques in the US and UK, and the potential exists to exploit synergies between these group companies.

“We firmly believe that through this new synergistic relationship between OMIGSA and Futuregrowth, our capabilities will be complemented and enhanced, with many benefits for both parties. More importantly, we are confident that our collaboration o­n research, new products and potential enhancements to existing offerings will prove exceptionally beneficial for our clients going forward,” concluded Dloti.