Market confident about Alexander Forbes despite executive changes
Analysts say the pension fund administrator remains trustworthy and the market will probably take its time in judging the new management team
The exodus of Alexander Forbes executive management in the past few months is unsettling but the market is unlikely to judge the company harshly, say analysts.
Instead, performance of the pension fund administrator’s stocks will be more dependent on how well new CEO Dawie de Villiers is able to implement his turnaround strategy.
“The current situation is unsettling for the business, and it will require hard work and a consistent message to stabilise the organisation that is highly reliant on its people,” said Karl Gevers, head of research at Benguela Global Managers.
The country’s largest pension fund administrator has lost several members of its executive team, starting with CEO Andrew Darfoor, who was fired by the board in September 2018, and followed by the resignation of CFO Naidene Ford-Hoon.
The latest blow came two weeks ago when Leon Greyling, CEO of Alexander Forbes Investments, group chief risk officer Vishnu Naicker and Christian Schaub, who served as the chief human resources officer, quit. The company did not announce their resignations at the time and says details of their resignations remain confidential.
“Transparency is essential for investors and corporates to build trust and confidence in management’s ability to govern and execute strategic priorities. Unfortunately, the Alexander Forbes board has been ineffective at managing perceptions and investors will remain sceptical of board decisions for months to come,” said Warwick Bam, head of research at Avior Capital Markets.
The analysts said the departures of executives, especially those appointed during Darfoor’s term, were, however, not surprising given the change of the CEO.
“There would also be an element of the new CEO wanting to build a team that he feels comfortable with and trusts,” said Gevers.
Bam said Darfoor was influential in the appointment of foreign nationals in key executive positions.
“We expected foreign executives such as Christian Schaub, John Mather and Tony Powis to resign alongside Mr Darfoor. Naturally, the increased uncertainty around strategic intent and company culture has exacerbated the executive turnover,” he said.
Gevers said the market will probably take its time in judging the new management team, as Alexander Forbes has a lot of potential if managed well.
De Villiers, who joined Alexander Forbes from Sanlam, has promised to deliver a turnaround strategy by the end of the group’s financial year in March, but said he would not be fundamentally changing much. Instead, the new strategy is expected to have high-level tweaks for most businesses and more focus on IT.
Bam said the silver lining for investors was that Alexander Forbes remained a stable and trustworthy financial institution with no operational issues.
“Governance concerns relate to strategic direction and implementation, which can be resolved with a new and stable management team that is now one step closer to being appointed.”