STEPHEN CRANSTON: Futuregrowth in a political power play
With R170bn under management, Futuregrowth covers the full spectrum of fixed income
What would Michael Leeman think about the recent developments at Futuregrowth, which he set up in 1993? If he ever comes across Gupta-owned The New Age in California, where he now lives, he would see his old shop described as white capital indulging in a political power play. Futuregrowth, originally a suite of funds within Southern Life, was founded to put Leeman’s doctoral thesis to life. And that was on how to invest in disadvantaged communities and still make money. Leeman has since been a serial entrepreneur, not necessarily always investing in the poor. Futuregrowth was the first suite of products focused on social development and empowerment. When it was controlled by Gloria Serobe’s Wiphold it was SA’s largest black-controlled asset manager. Futuregrowth has enjoyed the halo effect from its past, even though it is no longer black controlled (it is part of Old Mutual) and even though its range goes way beyond feel-good developmental products.
With R170bn under management Futuregrowth covers the full spectrum of fixed income. It might have been hard to differentiate from a competitor’s fixed-income silo if it had not been for chief investment officer Andrew Canter. He has enthusiastically looked for new entities to lend to and new instruments to package the loans.
If anything, I suspect, the state-owned enterprises considered Futuregrowth to be an easy touch, possibly even easier than the Public Investment Corp, which still has a preference for mainstream government bonds. But ultimately, Futuregrowth’s clients aren’t everything, as the US football coach Vince Lombardi would have said — they’re the only thing. Its duty to its clients trumps its business relationships, as well as its shareholders’ interest. It has suspended negotiations to provide R1,8bn of debt finance to three state-owned enterprises. Canter says there is just too much uncertainty around the future of the parastatals: possible changes to the governance, budgeting and approval processes around spending or lending will affect any credit assessment significantly. As long as there is uncertainty around these issues he cannot provide further capital from client funds. Canter’s critics have accused him of being antidevelopment and antipoor. This is rich, given his long support for development projects — and in any case, there is no suspension of funding to alternative energy companies, water boards or municipalities.