Motswedi drive Transformation through Empowerment financing – promoting black asset managers to the next level
Mark Davids, Investment Strategist – MOTSWEDI
Motswedi are a research led multi-management business focusing on transformed asset managers, we believe that the future of asset management in South Africa resides in this cohort. One of the many challenges facing emerging asset managers in the Institutional industry is the long sales cycles to secure new business. This, in addition to breaking down hardened and cynical attitudes of many asset allocators towards the high number of new asset managers in the industry, among other views; creates challenges for the growth of these small and medium sized businesses. All these factors often cause stuttered growth for these emerging asset managers, which may bring complexity to the business balance sheet in the quest for growth in asset under management (AUM).
Enterprise and Supplier Development (ESD) – Interest free loan funding
With a successful two-year track record in managing ESD programmes for several clients, Motswedi are currently preparing the launch of an ESD Interest-Free Loan Funding programme targeted at emerging asset managers. Managers that qualify would be classified as EME (Exempt Micro Enterprise) or QSE (Qualifying Small Enterprise) businesses. This Programme aims to accelerate the growth of emerging asset managers and take them to the next level of growth in their businesses.
R5 Billion in AUM a key milestone on the way to R10 Billion
There are a number of milestones which growing asset management businesses strive to achieve. One of the most important is the milestone of R5 Billion in Assets Under Management (AUM). At this level, even though still regarded as emerging, the asset manager will most likely have broken even, is likely able to pay their staff market related salaries and has made reasonable investments into infrastructure within the business. Also, the investment performance and strategic marketing efforts will have come through for them. All of which lend to the positive perception of capacity within the business. On the journey to R10 Billion in AUM, the manager will have successfully managed to make the right decisions around debt and equity funding for their business growth.
Performance by itself is not enough
Performance by itself is not sufficient to attract new clients to any asset management business, for emerging asset managers, the added complexity of not having a recognised name makes it that much harder to attract new clients. Innovation and thinking outside of the box are what is required from these businesses to make any headway in both the Institutional and Retail industry. Finding impressive and innovative ways of articulating a clear value proposition, demonstrating strategic use of scares resources – like smart marketing and distribution, outsourcing to trusted providers and clever investment into governance structures will make all the difference in getting the name of the business out there.
We believe that Interest-free ESD loan financing is a significant tool in the arsenal to targeted growth of emerging asset managers. With a demonstrable track record of transformational impact through ESD, Motswedi continue to blaze the trail of transformation in the asset management industry.