What is the Transformation end-game..?

If the goalposts of Transformation are continually getting moved its because we are aiming to achieve a level of demographic representation which truly reflects the lived reality of all South Africans. The question Motswedi have set out to answer is: “what is the Transformation end-game?” If we have a view of what the ideal picture of Transformation looks like, we may be-able to work backwards from that picture to where we are now, and in this way, all participants get a glimpse of what the Transformation end-game is – what is the true Level 1 B-BBEE template?

“The reason Transformation is necessary is to ensure that asset management in South Africa is sustainable. The industry needs to build a broad, representative capacity so that it doesn’t only look like the country in which it operates, but that it thinks and acts in a way that aligns with its clients and the country as a whole” source: www.citywire.co.za

An ideal picture of Transformation

So what does the ideal version of Transformation in South African asset management look like – ie. what is the true Level 1 B-BBEE template? This template should be seen as an ideal reflection of asset management businesses operating in South Africa, something to which all asset management businesses should strive.

To find some clues to what this template looks like, Motswedi have over time been analysing the growth trajectory of all organically grown majority black owned asset managers. We sought to identify some of the trends in how the next generation of entrepreneurial asset managers are practically managing their businesses and how the concept of the Diversity Dividend is unfolding within their businesses at all levels of the business.

Importantly, being Transformed businesses operating largely as new entrants into a highly competitive space, these businesses needed to demonstrate innovation, meritocracy and the power of the Diversity Dividend to grow their assets under management. In this process they have given us some valuable clues as to what the template of Transformation should look like.

These businesses are categorised according to their growth phase, in terms of Assets Under Management (AUM), from Start-up (R30 Billion). Motswedi analysed the demographics at levels of ownership, directorship, senior management and investment teams.

The Diversity Dividend.

To unpack this concept, Motswedi turned to our deep research data base on black asset managers in South Africa, built over many years of researching this part of the industry. What we have identified is that organically grown black asset managers go through various phases in their life cycle and at these different phases of growth we observe improvement in various metrics which lead to good business outcomes – which is not necessarily consistent with all asset managers. Motswedi have attributed these positive outcomes to what we call the Diversity Dividend.

As usual, we are happy to chat about this and our insights into the asset management industry…

Kind regards

Mark