THE third, but by no means lesser, leg of RMI Investment Managers’ (RMI IM) strategy of investing in independent asset managers is its joint venture with Royal Bafokeng Holdings (RBH) to create Royal Investment Managers (Royal).
The purpose of this vehicle is to help grow the number and scale of black-owned asset managers and investment talent in the country.
Company CEO Kabelo Rikhotso estimates that people of colour represent less than 20% of the industry’s investment professionals. He says that transformation has been very slow, but is improving.
"To be a great analyst you need to prove yourself and it can take an average of eight to 10 years for people to respect you. And you probably need to add another three to four years of being a generalist, so it can take 10 to 15 years to be a credible portfolio manager.
"As much as we want to drive transformation, we are giving ourselves 10 to 15 years to properly establish ourselves, but we need to see some young talent coming through and moving up the organisations."
It is with this vision in mind that he is heading the search for appropriate asset management companies to bring into the Royal fold. By drawing on the skills, capital and expertise within RMI IM and RBH, the company has a real opportunity to make a considerable difference to the make-up of the industry.
While the bulk of Royal’s attention will be on buying into existing black-owned managers, Rikhotso is open to helping establish new operations by skilled individuals who want to branch out on their own.
Without being restrictive about which opportunities to pursue, the company will initially be looking at asset managers in the institutional space.
Retail-facing outfits are expected to be attractive further down the line.
Within the institutional space, Rikhotso believes property and fixed income specialists offer the best bet for future growth, and there is scope to grow the participation of black-owned firms in the global property and multi-asset class space. The local equity market is quite saturated by a large number of managers and will feature lower down on Royal’s target list. Another area that holds great promise for growth, given the dearth of participation by black firms, is private equity and hedge funds.
"We want niche capabilities that can grow and that play along the efficient frontier," he says. "We will take our time to find the right partners because we want to build a portfolio that makes sense and that will be based on finding specific skills and capabilities."