Ben Kodisang on the state of life company-owned asset managers

This is the latest instalment of Citywire South Africa’s veterans series.
Ben Kodisang. Image: Supplied

Ben Kodisang might have started out in traditional asset management – he was the first black member of the Liberty Asset Management investment team when he joined in 1996 – but he is now a prime mover in the alternatives sector.

His Alt Capital Partners runs three funds: a social impact property fund, with investments in convenience shopping centres based in areas that have little exposure to the formal retail sector; a private equity fund, in partnership with the Black Management Forum; and an infrastructure transformation fund.

The first article in this series can be viewed here: ‘I have never seen an asset management merger which has worked’

His main role is raising capital, designing governance and securing land. He is well qualified for that as in his varied career his longest stint, for seven years, was running Old Mutual Property.

Kodisang is grateful for his grounding in accounting. He did his articles at Ernst & Young but said he did not have the personality to be an auditor.

Kodisang was able to join Libam as it had reduced its minimum age requirement, but “I don’t believe I was recruited as part of an affirmative action programme. In 1996, few corporates had cottoned on to the transformation imperative.”

“There were very few black managers at the time. The ones that stood out were Adam Ebrahim at Allan Gray (later Oasis), Asief Mohamed at Metropolitan, Shams Pather at Real Africa and Imtiaz Ahmed at Fedsure.”

Times have changed, although perhaps not as much as they should.

“If you were dropped into today’s investment world from 1996,” Kodisang said, “you would notice a significant difference”.

“There has been transformation at all levels, especially the lower levels. But I am concerned that there are not enough black people in the manufacturing side (the investment teams) with transformation strongest in business development, operations and leadership.”

Corporate culture

Liberty was shedding assets when Kodisang joined. Its value style was underperforming the growth shares in what we now call the dot.com boom of the late 1990s.

“Allan Gray stuck to its knitting and remained invested in unfashionable old economy shares,” said Kodisang, “but Liberty decided to de-risk by moving into the more fashionable IT and niche financial shares. It missed much of the value recovery.”

After Liberty, Kodisang joined Prodigy – a startup run by former Investec marketing whizzkid Robbie Alexander. It was one of several majority black-owned managers started at the turn of the millennium. It was positioned as a growth manager, focused primarily on small caps and perceived growth sectors of the time, such as media.

It also had some credible shareholders, such as New Africa Investments Ltd – the oldest black economic empowerment consortium in South Africa – Union Alliance Holdings and Pontso – a women’s investment group headed by veteran union organiser Irene Charnley, later a prominent director at MTN.

The second article in this series can be viewed here: Genius and luck in asset management

“Prodigy didn’t have much chance of survival after the 1998 Asian crisis. There was a flight to quality and the small-cap boom came to an end,” Kodisang said.

He has worked for all three of the major life insurance owned asset managers: Old Mutual Investment Group, Sanlam Investments and Stanlib.

“Unfortunately, these businesses are likely to remain behind the independents when it comes to winning third party business. There is little opportunity to build up a strong corporate culture to compare with, say, what Hendrik du Toit has built at Ninety One. There is too much restructuring and there have been too many changes in leadership at the life office-owned shops.”

“And even if these shops provide skin in the game through some form of phantom equity, investment professionals will never feel that they actually own the business. It is not the same emotionally as owning your own business.”

Identifying an advantage

Kodisang, under his mentor Thabo Dloti, was asked to manage the separation of the unitary Old Mutual Asset Managers, and later Stanlib, into separate boutiques. In both cases, the boutique model was reversed and both now have a combined equity and balanced unit – not so different from when the boutique model started.

But he says that through their balance sheets, the life office-owned asset managers have an advantage in alternatives such as private equity and infrastructure funds.

“Perhaps not so much in direct property, where it is best to operate independently without the interference of a corporate head office.”

Kodisang left Old Mutual Properties in 2011 after his bosses overruled the listing of the Triangle Property Fund, which housed its major retail and office properties.

“Top management was not confident about the prospects for the listed property market, which had been in a bull phase since 2003. But this bull market still had another seven years to run.”

He said Triangle would have undoubtedly been considered a blue chip in the sector.

“We owned the largest shopping centre in the country – Gateway in Umhlanga – as well as Cavendish Square in Cape Town, Menlyn in Pretoria [at the time] and The Zone in Rosebank, Johannesburg.”

Increasingly, he said, his interest moved from his roots of stock picking in public markets to general management and the alternatives space. He was given the opportunity in 2016 to oversee Sanlam’s entire alternative asset suite, from hedge funds to unlisted property, private equity and the African operations.

“Sanlam was quite envious of what Old Mutual had achieved in alternatives under Paul Boynton. It is still catching up, as is Stanlib.”

Though Kodisang is only 51, he says it is highly unlikely he will work for a corporate again. “I can now deploy my experience and knowledge in my business. I have promised to stay 10 years and could extend that for five years after that.”

Stephen Cranston is a journalist at Citywire, which provides insights and information for professional investors globally.

This article was first published on Citywire South Africa here, and republished with permission.

COMMENTS   1

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From where the notion that the team must be paid 40% of profits or own it? Ninety One was until very recently a department and when listed, it probably had the most funds under management of all the outfits?

There is also no real point to the managers investing own capital along with client funds. It is not going to make me feel better about the low performance on my money just because Johnny the fun damager also suffered the same fate. Johnny is not going to make better or worse decisions investing alongside clients, he thinks he aways makes the best decision. Some of them made TERRIBLE personal investment allocations before AND after Steinhoff crashed.

End of comments.

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