Anchor Group Ltd Vunani Small Cap conference March 2015

Transcription

1 Anchor Group Ltd Vunani Small Cap conference March 2015

2 What is Anchor Group? Primarily Anchor Capital SA s fastest growing asset manager, with R11bn of assets Minority stakes in other asset management ventures Different focus or geography; they leverage off AC structure Cartesian Capital (19.9%) black-owned institutional asset manager Anchor Securities (25%) private client stockbroking business Ripple Effect 4 The business of financial services knowledge, providing education and online research services Offices in Sandton, Durban, Irene, Cape Town 48 degreed staff across group (7 CA(SA) s, 12 CFA s/cfa candidates) 38 in Anchor Capital 9 in Anchor Securities

3 The Listing

4 The share - facts and figures Listed at R2 on 16 Sept 2014 (R60m raised) Issued 40.3m shares at R6.20 (R250m raised) on 6 Dec 2014 Shares at y/e = 140m 28 million shares have traded since listing (5m per month) Forecast adjusted HEPS for 2014 = 29-31c Nav per share = 250c (>R300m cash)

5 Our ducks are in a row Listed company World-class investment team Global investment process 3-year track record Top performance Attracting industry leaders Funds gaining critical mass No.1 General Equity Fund * in South Africa As measured by Funds Data 12 months to 31 Dec 2014 Source: Funds Data Online * Past performance is no indication of future results and an investment in equities involves capital risk. Investors should consider the suitability of an investment relative to their risk profile and financial situation. Anchor Capital is an authorised Financial Services Provider. FSB # 39834

6 Our growth Grown AUM by 160% in 2014 from R2.8bn to R7.3bn Grown from number 150 to +/- number 25 asset manager in SA in 3 years Consistently adding +/-R300m pm / R3.6bn per year for last 8 quarters Pipeline indicates that this can be sustained R11bn at end Feb Feb 2015 AUM Advice Total assets

7 The SA asset management universe Grown from number 150 to +/- number 25 asset manager in SA in 3 years (0.1% market share, Coronation is 120x bigger) Objective: Big Player category in 3 years Note: This analysis includes all asset managers who run public unit trusts. Perfect information is not available for all of the below and is based on estimates and industry knowledge; certain players might not be correctly allocated below. The giants (R100bn+) (11) Big players (R30bn- R100bn) (11) Mid-sized (R5bn- R30bn) (8) The challengers (R2bn- R5bn) (16) 1 Absa 1 Fairtree 1 36One 1 Aylett 2 Allan Gray 2 Kagiso 2 Afena 2 Bateleur 3 Ashburton/FNB 3 Melville Douglas 3 Grindrod 3 Noble 4 Coronation 4 Oasis 4 Mazi Capital 4 Cannon 5 Discovery 5 Plexus 5 Cadiz 5 ClucasGray 6 Investec 6 Prescient 6 Sasfin 6 Community Growth 7 Momentum 7 Prudential 7 Sesfikile 7 First Avenue 8 Nedgroup 8 PSG 8 Verso 8 Imara 9 Old Mutual 9 RE:CM 9 Peregrine 9 Harvard House 10 Sanlam 10 Citadel 10 Anchor 10 Laurium 11 Stanlib 11 Visio 11 Kruger

8 Why have we achieved success so far? We take investment very seriously We investigate every opportunity thoroughly and have a very big investment team for our size Culture We own the business and have had immense drive to secure and deliver for clients Trust We have earned the trust of clients and a great deal of our business has come from referrals Making clients money We have performed well and added to market performance through innovative money-making ideas (eg. Attacq and BEE schemes)

9 Further reasons for success Extremely active marketing Big focus on cold calls, TV, radio, internet and biggest success has been daily newsletter, with 6,000 recipients. We put out regular high quality research Tick all the boxes We got the story right: Right shareholders, investment team, product, pedigree etc. Willingness of market to support new player Market fatigue with vanilla offerings of big existing players Nimble - appropriate range of product We have grown the product range in response to where we see market demand

10 Stages in the life cycle of AM company We are well into Phase III Phase Nature of phase Indicative assets under management I Obtain licensing, build investment team, attract initial private client assets <R1bn (usually 2 years) II Build private client critical mass assets, build out team, start unit trusts, initial corporate and IFA support R1bn R4bn (years 3-4) III Start to get meaningful IFA support and unitised business grows R4bn-R10bn (need 3 year track record) IV Get taken seriously by institutional market, risk consultants and multi-managers R10bn-R20bn V Become a big player R20bn-R100bn

11 Attractions of business and model Business has built-in inflation of 15% per annum, on average All profits in cash, virtually no working capital Simple business 5 invoices per month, paid within 15 days Expenses 80% rent and staff Around 70% Rand hedge Very little fixed investment required Fixed costs now in place Some step-up with growth, but in principle only sales and PM costs (direct revenue drivers) will be added Business model has 50% operating margin, already at >35% Largely annuity earnings, +/-15% of assets have performance fees Sticky, diversified base which will be resilient to market fluctuations The basic model Assets (R'm) 4,000 6,000 8,000 10,000 15,000 Yield 1.20% 1.15% 1.10% 1.05% 1.00% TO Margin 40.0% 42.0% 45.0% 47.5% 50.0% Op profit PAT Turnover 100 Fixed costs 30 Margin 70 Incentives 21 Profit margin 49

12 Current client base We have gained the trust of SA s elite Dominated by Ultra High Net Worth clients 1200 clients altogether Numerous listed company CEOs and directors Biggest >R500m, average R8m +/-50 clients in R20m-R250m range Big clients receive high-touch service, smaller clients invested in unit trusts R2.4bn in unit trusts +/-R1bn offshore in +/-100 accounts Doing business with the big SA advisors Corporate/ Institutional: Various, including top 40 companies

13 Anchor Group structure Anchor Group Ltd 50% * 100% 65% Anchor Financial Services Anchor Capital (Pty) Ltd Ripple Effect 4 (Pty) Ltd 19.9% 25% 100% Cartesian Capital (Pty) Ltd Anchor Securities (Pty) Ltd Anchor Capital Cape Town (Pty) Ltd * EFFECTIVE INTEREST

14 Key people Person Age Years exp. Qualifica5on Role / 5tle Special skills Peter Armitage CA (SA) CEO of Anchor Group and Capital Market experience Anthea Gardner B Soc Sci, MBA CEO, Cartesian Capital MulF- skilled, fixed income MaIhew Norwood- Young B Comm Head: MarkeFng Best fetcher in the market Sean Ashton B Comm (Hons), CFA Chief Investment Officer Among the best investment minds Todd Kaplan BSC (Hons) Chief of OperaFons The most efficient around Darryl Hannington B Comm (Hons), CFA Head: PorYolio management Great client service Glen Baker B Comm (Hons) Head: AlternaFve Investments AlternaFve markets Lee Cairns BA (Econ), CFP Head: Wealth management Can operate at highest level Fransoa Swart BA, MBA Candidate Head: Trading Great reliable trader David Gibb CA (SA), CFA Fund manager Deep thinker, ran Stanlib s equity investment team Neil Brown Actuarial Exec AFS Former CEO of Citadel Wealth Dale Franklin B Comm (Investment Management) Exec AFS Former CEO of Sasfin Wealth Ferdi Schenck B Comm LLB Exec - AFS Former Head of Compliance and Risk at Allan Gray David Rosevear CA (SA) Head of Corporate Finance One of the most experienced in corporate South Africa

15 Key individuals - experience Mike Teke Chairman Peter Armitage CIO Investec Wealth David Rosevear Director Bidvest Matthew N-Young Sales, Investec Sean Ashton Senior Portfolio Manager Investec Glen Baker Senior Portfolio Manager RMB Peter Little Senior Portfolio Manager Credit Suisse David Gibb Head of Equities, Stanlib Dale Franklin MD Sasfin Asset Management Ferdi Schenck Co-founder Sygnia, Allan Gray ops Neil Brown CEO Citadel

16 Getting the future right Investment performance and product World class global team 15 analysts 5 unit trusts Segregated portfolios Distribution +/-30 client facing staff / asset gatherers by year end Anchor Financial Services Maintain profile Governance, risk, compliance In our DNA Right people

17 How the business is built leveraging off the investment process Local model portfolios Forms base of segregated portfolios, Portfolio Managers tailor to individuals Global model portfolios Forms base of segregated portfolios, Portfolio Managers tailor to individuals Unitised products Portfolios created for unit trusts and institutional mandates, using base of ideas from investment process Hedge funds Investment ideas implemented (long and short) in hedge fund products New ideas Ideas generated in process developed into new money making structures The investment process Local and global, across asset classes, 20 contributors Investment views formed, consumed by investment community in different forms

18 Products Unit trusts Equity Segregated por0olios Peregrine account Hedge funds Offshore Special opportuni8es Long/Short Segregated (equity / balanced) SA Equity RMB Note Property Global Equity Fund Managed/ Balanced Flexible / Income Property Personalised unit trusts Personal hedge funds Absolute Macro Fund BEE Discounted placings Various other Mining rehab R2.4bn R6.5bn R550m R1bn R500m

19 Equity Performance 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 3% 2% 3% 23% 11% 7% 6% 8% 5,5% 31% 21% 15% 70% 51% 40% 34% 25% 20% 1- month 3- month 6- month 12- month Since incep8on Since incep8on (annualised) Fund Benchmark Peers Fund Benchmark Peer Group 1-month 3,2% 2,6% 3,3% 3-month 11,1% 7,0% 5,8% 6-month 22,6% 8,0% 5,5% 12-month 30,6% 21,3% 15,4% Since inception 69,8% 51,1% 39,5% Since inception (annualised) 33,5% 25,3% 19,9% No.1 General Equity Fund * in South Africa As measured by Funds Data 12 months to 31 Dec 2014 Source: Funds Data Online * Past performance is no indication of future results and an investment in equities involves capital risk. Investors should consider the suitability of an investment relative to their risk profile and financial situation. Anchor Capital is an authorised Financial Services Provider. FSB # 39834

20 2014 Equity Fund performances Anchor +25% Mean +11% Each dot represents one of 180 General Equity Funds

21 Distribution We firmly believe that to grow an asset management company, you need equal focus on investment and marketing We take an aggressive, direct approach to marketing and sales There are numerous qualified cold calls from our business every day We also create products and ideas to sell Mining rehabilitation funds BEE scheme Section 42 transfers Gearing on shares Special opportunities (Eg. Attacq, Advtech) Personal hedge funds and unit trusts (not public) More to come

22 The way we market Direct cold calls The best in the business Media / mouthpiece We have our own TV show on CNBC: Talking Stocks We are regularly featured and quoted in newspapers / internet sites Research / newsletters A deliberate strategy to build database Morning newsletter sent to over 5,000 people daily Advisor.co.za sent to over 1,200 IFA s weekly We distribute research which gets coverage in many places Social media Effective and extensive use of Twitter and Facebook Selective adspend / marketing partnerships: Billboards, golf carts/courses, events Listing Had a phenomenal impact on profile, new clients call-ins etc. Over 2,300 shareholders (350 at listing in Sept 2014) Direct relationship marketing Weekly breakfasts, parties, events etc.

23 Markets and approach/strategy Man in the street Product Unit trusts / New IT venture Approach Team Not the focus at the moment, but default business streaming in. Building business brand. Desk service if required HNW Clients IFA s Ins4tu4onal Bespoke por4olios and wealth management 1) Sales team approaches and hands over 2) Individual wealth managers join with assets 1) 5+3 sales 2) 5+13 wealth managers Unit trusts and segregated Brand building, advisor.co.za, direct contact, roadshows, videos etc. AFS team and dedicated sales person Segregated / unit trusts Direct pitches to companies and trustees. Approach covered in separate presentahon 3

24 Asset gathering calculation Team in 6 months time should aim for +/- R400m in assets per month = R4.8bn per annum (excludes market growth) This is currently being exceeded Institutional the big swing factor Sales Por*olio managers who bring in assets IFA s Ins7tu7onal Call- ins Current: 5 Current: 6 Current: 4 n/a = 15 Total in 6 months: 8 Total in 6 months: 12 Total in 6 months: 4 n/a = 24 Per person per month: R10m R10m Team: R100m Total per month: R80m R120m R65m R100m R20m

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26 Earnings equation (assume midrange of trading update) R bn Divided by +/-140m shares Starting AUM Ending AUM ? Avg AUM ? R'm R'm R'm "Core business" 5 21 Earnings on K ? Excludes new ideas and acquisitions Major risk is market performance R11bn at end Feb 2015 Function of AUM and yield R300m capital 5% = R15m 10% = R30m 15% = R45m Depends on timing of acquisitions

27 Thank you