The financial cake is big enough for everyone, says new black stockbroker
Newly formed Khumo Securities does not want to be perceived as an empowerment company, saying it is their own doing that black professionals do not participate meaningfully in the financial services value chain.
“We come from a school of thought that believes in merit. I have personally paid my school fees in terms of getting the experience and establishing the relationships needed to succeed in this industry. But what’s often underscored is that it is not easy for black professionals; [but] it’s not easy for anyone with big ideas in this industry,” said the CEO of the newly formed stockbroking firm, Mzwakhe Nhlanhla.
Khumo Securities is a new sell-side stockbroker, formed after three black professionals acquired a majority shareholding in Genesis Securities for an undisclosed sum. The three — a securities stock broker, a chartered accountant and another partner who has been involved in consulting — join Thebe Securities, Legae Securities and Argon Securities among black-owned stockbrokers who have made a name for themselves in the industry.
Nhlanhla said that with R9-trillion of assets under management in SA, there is “enough space” for everyone to participate meaningfully.
The formation of Khumo comes in a year characterised by consolidation in the industry. Earlier this year, Peregrine Securities was formed through a black economic empowerment consortium that would see Legae Securities hold 65% of Peregrine Securities. The deal is still subject to the Competition Commission’s approval.
A month after the Legae and Peregrine merger, a consortium headed by Mazi Holdings acquired 51% of Macquarie Equities SA and rebranded it as Mazi Macquarie Securities.
Nhlanhla said the new Amended Financial Sector Code, which is intended to transform the financial sector, has been the driving force behind the consolidation trend.
However, the Association of Black Securities and Investment Professionals (Absip) said the fact that empowerment legislation remains voluntary and only applicable to those who wish to comply means black brokers are still not getting the necessary support.
It said other challenges include “short-term and inconsistent” support for black brokers by institutions, which makes it difficult for them to plan with any predictability.
Black brokers are generally given low-quality, illiquid trades to execute and trades are small and hampered by “school-tie connections” acting as gatekeepers at institutional asset houses, says Absip.
Absip president Sibongiseni Mbatha called the formation of Khumo Securities a “transformative transaction”.
“We are pleased to see our rank and file participate in mainstream economic activity,” said Mbatha.