IN A bid to emulate the success Rand Merchant Investments (RMI) achieved in backing financial services entrepreneurs like Adrian Gore at Discovery and Willem Roos of Outsurance, the group has made a bold entry into the asset management industry.
As any good asset manager would, the investment group is diversifying its portfolio by looking for equity stakes in a range of boutique outfits rather than jumping all in with one or two big investments.
Headed by Chris Meyer, who successfully led RMB Morgan Stanley for nearly a decade, RMI Investment Managers (RMI IM) is plotting an audacious path smoothed over by a sizeable initial war chest to execute its strategy and through RMI’s reputation in the financial services industry of being a good partner for entrepreneurs.
"Success would be defined in two ways. First, we want to develop a reputation in the market as the go-to shareholder for asset managers if they want a strategic investor in their business. We want to live the RMI ethos in asset management, which is being a supportive but non-interfering shareholder.
"Second, we want to deliver financial returns for our shareholders, which means succeeding in building our affiliates together with their management teams to a level where they generate strong returns for RMI shareholders and are of a size where the RMI IM business matters in the context of the overall RMI portfolio."
The new business, which was launched in 2015 and made its first acquisitions at the beginning of this year, was born out of the conviction that independent asset managers represent an untapped growth opportunity.
RMI IM’s strategy is evident in the investments made in independent managers that possess capabilities and differentiation across different asset classes, client bases and unique investment expertise. Its portfolio of affiliates comprises Coreshares, Northstar Asset Management, Perpetua Investment Managers, Tantalum Capital, Sentio Capital Management and RMI Specialist Managers.
Meyer says RMI IM’s model is to buy minority equity stakes in independent asset managers and support their growth by aligning themselves with the management teams and clients of their affiliates. "We do not interfere with the investment process, which is a core principal that defines what we do, as well as not taking a majority shareholding. The independence of the independent asset manager is its most important asset."
The value RMI IM contributes to its partners is a mixture of strategic input on business management and succession planning, a capital injection to help fund growth initiatives, operational capabilities and support, and distribution. This latter contribution is a three pronged strategy via support of the affiliate’s existing distribution capabilities, RMI IM’s own distribution team as well as via MMI Holdings that provides reach through its wealth advisory and other distribution platforms.
"Our value-add differs depending on the affiliate. For younger businesses, help with asset growth, profile building and professionalising the business is most important. For more established businesses, succession planning and generational transfer of ownership among the investment team is often highest up on the list," says Meyer.