Sanlam may have sold its active investment management business, but Standard Bank has every intention of keeping its Stanlib investment business.
Sanlam officially swapped Sanlam Investment Management (SIM) for a 12.3% stake in South Africa’s largest asset manager, Ninety One. This put pressure on other shops owned by life offices to reconsider their future. Old Mutual has been quiet but might make an announcement soon.
But Stanlib, Standard Bank and Liberty Life’s investment arm, is remaining as is. According to Giles Heeger, the new CEO of Stanlib South Africa, it still positions itself as a leading asset manager with significant growth ambitions.
Derrick Msibi remains the overall CEO of Stanlib, with an extended role. He is now responsible for the other asset management operations within the Standard Bank Group, including East and West Africa. This excludes the niche private client shop Melville Douglas, which Standard Bank defines as a “wealth manager”.
Mark Lovett continues in his role as head of investments — what other firms call chief investment officer.
“The three of us have been working well together for some time now, together with a cohort of senior investment and other professionals,” says Heeger.
Heeger joined Stanlib from LibFin, which was started by the then Liberty CEO Bruce Hemphill as a quasi-merchant banking business within the life office.
Heeger says LibFin was established to manage the market and liquidity risks associated with long-term insurance contracts, employing former investment bankers. “During the 2008 global financial crisis, LibFin reduced significant market exposures quite effectively through prudent risk management.
“This hedging took place over two discrete years. In 2008, it generated about R1bn in profit from reducing interest rate exposure. But in 2009 there was a loss of R519m from reducing equity exposures.”
LibFin missed out on much of the bounce back in domestic and global equities, which recovered sharply from March 2009.
Heeger says that while the 2009 results were disappointing, they reflected the challenging and volatile financial landscape.
“I have always been proud of the LibFin team for navigating these challenges to achieve a cumulative net profit over that period.”
Before joining LibFin, he spent many years in investment banking at Standard Bank.
“My roles have always centred on building great teams in a financial markets environment and driving performance — the same applies at Stanlib.”
He says that culturally, investment banking and asset management have many similarities, including working with highly driven and talented individuals.
He argues that the main differences relate to the importance of the fiduciary mindset — asset managers run other people’s money and need a long-term horizon, which is vital in third-party asset management.
“Ultimately, success will be measured by the investment returns we generate for clients.”
In spite of SIM’s demise, Heeger is optimistic about the future of Stanlib’s single-manager operation — Stanlib’s multimanagement business has a different reporting line — as Stanlib operates from a strong foundation.
“The Standard Bank Group is committed to asset management and our success, as demonstrated by the establishment of a separate investment and asset management portfolio [predominantly what used to be the constituent parts of Liberty Holdings].”
He adds that Stanlib benefits from the significant investment the group is making in its operating systems.
“Importantly, they are supportive and respectful of the necessary boundaries and autonomy that an asset manager requires to thrive. Most importantly, Stanlib’s investment performance across our key capabilities is also very competitive when compared to our peers.”
Taking an unfashionable view, Heeger says that financial conglomerate asset managers can be highly competitive against independent firms.
Notable examples include JPMorgan Asset Management (part of JPMorgan Chase & Co) and Pimco (part of Allianz), as well as the local example of Ninety One, which was previously wholly owned by the Investec banking group.
“These leading firms take deliberate steps to ring-fence or create boundaries between their asset management operations and their banking and insurance activities.
“The Standard Bank Group has deliberately acted to ring-fence Stanlib in recognition of this. Compelling investment performance from Stanlib together with the distribution, financial muscle and scale advantages of being part of a financial conglomerate provide a significant competitive advantage.”
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