Investec Spins Out Ninety One

Investec is in the process of spinning off its London-based asset management business, which has GBP 121 billion in assets under management. That operation was founded in South Africa by Hendrik du Toit in 1991, so the new name that they came up with for the company is Ninety One.

An excellent article (link below) by Sasha Planting in the Daily Maverick reviews the listing process, and looks at the threats and opportunities that the business faces.

I like Hendrik a lot. He's just a few years older than me, and has been really friendly to me in our few interactions over the years. One year we met each other in the street for a chat after running the New York Marathon.

He makes the comment in the article that "Investing is an act of faith. It's an act of hope, of trying to shape a better future". He notes that asset managers are agents of change, because they "pool and apply capital, and then return it for people to live better".

I endorse this view. When you buy shares in a listed entity, you are supplying them with your capital to further their business growth, and getting rewarded with a share of their profits and (hopefully) dividends. This is why we invest in world-changing companies like Google and Amgen, not ones that kill their customers like British American Tobacco.

Although active asset managers are threatened by passive, index tracking exchange traded funds, du Toit notes that "if you have a business with an operating margin of over 30% and infinite return on equity, you can survive. Just don't compete head-on with Black Rock." Good point!

More in the article on the Daily Maverick: An Investor Unshackled Has Wings to fly.