INVESTMENT company Rand Merchant Insurance (RMI) has set aside R2bn to invest in new financial services firms, and in partnership with Royal Bafokeng Holdings is looking to take equity stakes in black-owned asset management groups aiming for growth.
RMI CEO Herman Bosman said this was part of plans to diversify its holdings beyond Discovery, MMI, OUTsurance and RMB Structured insurance.
To support fledgling business, Mr Bosman said RMI has started Alphacode, a business aimed at guiding entrepreneurs with innovative ideas in financial services. From this, RMI hopes that the next Discovery or OUTsurance will emerge.
“For next-generation businesses, we will invest R1bn. So far we have looked at about 50 of these next-generation businesses,” Mr Bosman said.
As part of its strategy, RMI is looking to diversify into the asset management space, having started RMI Investment Managers, headed up by Chris Meyer, the former CEO of RMB Morgan Stanley.
On plans for black-owned asset management companies, Mr Meyer said Royal Bafokeng and RMI were looking to appoint a black CEO who would head the division, targeting black-owned money managers.
In the business-targeting investments in the black asset management space, RMI Investment Managers will own 49% and Royal Bafokeng 51%. To grow in the space, Mr Meyer said RMI Investment Managers had se0t aside about R1bn.
“We are looking to buy minority stakes in independent asset managers. We want to help these asset managers to become great businesses,” he said.
The plan was for RMI Investment Managers to provide financial muscle and guidance on the best way to run and grow these businesses. Last week RMI announced it had taken stakes of 25% to 30% in asset management businesses Tantalum Capital, Northstar Asset Management, Perpetua Investment Managers and Coreshares.
“In asset management, most of the businesses we are partnering with are financially independent. It’s very important that we don’t jeopardise that. They must still be owner-managed and run their own brands,” Mr Meyer said, adding RMI Investment Managers was looking to hire people to build investment teams. The company has already hired a fixed-income team and is looking for another group in the equities investment space.
Mr Bosman said RMI planned a portfolio of about 10 new businesses in the next three years. It recently took a 25% stake in small and medium-sized enterprises lender Merchant Capital, which Mr Bosman said would also benefit from the Alphacode initiative.
In its results for the year ended June RMI posted a 5% rise in normalised earnings to 212.7c a share. The results were affected by OUTsurance’s Australian operations, which had to pay claims relating to adverse weather conditions. RMI said its dividend rose 7% to 116c per share in the period under review.