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Stanlib; Africa presentation; November 2013


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Stanlib; Africa presentation; November 2013

  1. 1. Stanlib Update Alan Botha Senate Conference, November 2013
  2. 2. STANLIB Print Adverts 2
  3. 3. We Are a Leading Investment Business Scale Enduring Track Record 30 June 2013 Largest Oldest R504 bn Unit Trust Company in Africa existing Unit Trust in South Africa: STANLIB Equity Fund Assets under management and administration Level 2 BBBEE Status* Our Clients Awards* 71% 400 000+ 72 92 of our investment team are black Retail and Institutional clients *South Africa only Raging Bull Awards Morningstar Awards * Since 2002 Operating Model Our People Heritage Advantages Diverse and commitment of a boutique, strength and efficacy of a large investment house Part and complementary skills and capabilities of a bigger group: Standard Bank and the Liberty Group
  4. 4. Geographical Reach Creating 7 Financial Freedom Experienced Team 80+ African countries Investment professionals with over 1000 years of collective investment experience Investment Capabilities Franchise Model Diverse Designed investment offering designed to deliver our investment promise to clients to deal with the complexities of the investment world with agility Our Values ➜ ➜ ➜ ➜ Passion for our clients Investment Excellence Innovation and Curiosity Teamwork and Fair Play
  5. 5. There is no ‘one size fits all’ investment solution for clients. Diverse clients need unique investment outcomes.
  6. 6. Multi-Specialist Franchise Model The Leaders of the Teams who Manage your Clients’ Money Henk Viljoen Herman van Velze Robin Eagar Keillen Ndlovu Fixed Interest Franchise Balanced and Core Equity Franchise Balanced and Value Franchise Listed Property Franchise Amelia Beattie Eben Maré Andrew Vintcent Patrick Mamathuba Direct Property Franchise Absolute Return Franchise Unconstrained Equity Franchise Beta Quants Franchise John Mackie Henry Munzara Joao Frasco Greg Babaya Pan-Africa Franchise Research Franchise STANLIB Multi-Manager Franchise Infrastructure Franchise Marius Oberholzer 6
  7. 7. STANLIB Core Solutions INVESTMENT SOLUTION MODERATE CONSERVATIVE AGGRESSIVE STANLIB Equity Fund Growth RETURN STANLIB Balanced Fund (Reg 28) STANLIB Dynamic Return Fund (Reg 28) Income and Growth Income STANLIB Balanced Cautious Fund (Reg 28) STANLIB Flexible Income Fund (Reg 28) 1-3 years TIME HORIZON 3 years 5 years + 3 years + 5 years + MAXIMUM EXPOSURE TO GROWTH ASSETS DOMESTIC EQUITY OFFSHORE 10% 40% 25% 15% 75% 25% 75% 25% 25% 100% 20% PROPERTY 7
  8. 8. Retail Distribution: Marketing Asset Management Johannesburg Great North Alan Botha Hannes Weideman Pat Magadla KwaZulu-Natal Simon Bent Wholesale and External Platform Allan Geddie – Cape Town Lenise Albertyn Troy Mazibuko – Johannesburg Western Cape Carolyn Vlaming – Relationship Manager JHB Eastern Cape Duane Littler Lara Parker 8
  9. 9. Africa: An Investor Perspective David Makoni Senate Conference, November 2013
  10. 10. Presentation Outline ➜ Introduction to STANLIB ➜ Presentation Disclaimer ➜ Africa in the Global Context ➜ Evolving Perceptions of Africa ➜ Reasons for Shifting Perceptions ➜ Thoughts on Successful Investing ➜ The Lingering Challenges
  11. 11. 01 Introduction to STANLIB
  12. 12. A Leading Africa-Focused Investment Business Scale 30 June 2013 LARGEST R504bn MANAGEMENT Company in Africa (Manco) ASSETS UNDER MANAGEMENT AND ADMINISTRATION Experienced Team Experienced Team 80 Raging Bull Awards 72 OLDEST EXISTING Investment professionals with over 1000 years of collective investment experience UNIT TRUST IN SOUTH AFRICA STANLIB EQUITY FUND Local Presence in African Countries 7 In-country businesses Morningstar Awards 92 Don’t choose a company focused on performance, choose a focused company that performs. 12
  13. 13. STANLIB’s Geographic Presence and Ambitions Current physical presence Markets serviced from other jurisdictions Potential presence South Sudan E First Asset Manager to manage money in South Sudan Uganda W STANLIB was the first asset manager to set up shop in 2002 Ghana Kenya Nigeria Running the largest Unit Trust in Kenya Namibia Tanzania Launched the first Property Unit Trust in Namibia in 2007 Swaziland Botswana AUM of E4.0 billion and largest fund manager with local presence Currently has the biggest unit trust platform in the country and running the biggest Money Market Fund in Botswana South Africa Largest Management Company in Africa Lesotho S STANLIB launched the first unit trust in Lesotho as part of the Lesotho Government’s privatisation initiative E=East Africa; S=Southern Africa; W=West Africa 13
  14. 14. DISCLAIMER The views expressed in this presentation are solely mine and do not in any way represent the official views of STANLIB. 14
  15. 15. Africa in the Global Context
  16. 16. Africa In The Global Context…. Africa’s Geographic Size ➜ 54 distinct countries ➜ Collective GDP of USD1.8 trillion in 2011 ➜ ➜ ➜ Roughly equal to GDP of Brazil or Russia USD2.6 trillion in collective GDP by 2020 USD860 billion combined consumer spending power in 2008 ➜ USD1.4 trillion in consumer spending by 2020 ➜ ➜ 10% of the world’s oil reserves and 90% of its chromium and platinum group metals ➜ 316 million mobile phone subscribers signed up in Africa between 2000 and 2010; ➜ Map source: World Watch Accounts for 60% of world’s total uncultivated arable land; Average government debt-GDP (%) for sub-Saharan Africa reduced to 31% in 2010 Source: McKinsey & Co 16
  17. 17. Africa Suffers From Excessively Negative Global Perception… ➜ Under-reporting of Africa’s success stories by the global media (The ‘Bad News is Good News’ syndrome) ➜ Versus sustained promotion of other developing regions as only viable ‘can-do-no-wrong ‘ economic propositions (BRICS, South-East Asia, etc.) ➜ Endless projection of Africa as a ‘basket case’ by global aid agencies in order to justify the existence of the global ‘Aid Complex’ ➜ Historical prejudices towards black Africans by other nationalities ➜ Lingering (and justifiable) memories of past policy mistakes and leadership short-comings on the continent ➜ With some exceptions, the overall trend is one of positive change and development 17
  18. 18. 02 Evolving Perceptions of Africa
  19. 19. Previous Perceptions of ‘Hopelessness’… 19
  20. 20. …Have Shifted to Optimism and Opportunity… Source: Various Publications 20
  21. 21. Hence Major Global Firms Showing Growing Confidence… June 2011 May 2012 Wal-Mart Completes Massmart Purchase Korean Companies Invest in Africa “Doug McMillon, the President and CEO of WalMart International Inc., said, ‘With the closing of our investment in Massmart, we are very excited about our entry into South Africa and the broader African continent…’” (Wal-Mart Stores Inc. website) South Korean mining, electronics, power generation and telecommunications companies are looking to invest more in African countries, as these markets expand at an accelerated pace. In May 2012, Samsung said it aimed to realize US$5 billion dollars in revenue by 2015 from subSaharan Africa. (Reuters) August 2012 Nestle Looks to Africa to Boost Growth Global food producer Nestlé is hoping emerging markets will contribute about 50% of sales by 2020, with Africa's contribution growing to more than 10%, CEO Paul Bulcke said yesterday. Consumer goods companies are increasingly seeking to tap into the growing African market of 1billion people. (Financial Times) August 2012 “American Firms Waking Up to African Opportunities” “American companies are starting to wake up to huge investment opportunities in Africa”, chairman of US ExportImport Bank, Fred Hochberg, said in Johannesburg yesterday. The bank’s loans to Africa have more than doubled from $14 billion in 2009 to $33 billion in 2011. (Source: Yahoo! News) 21
  22. 22. …and Africans Showing More Confidence in Themselves! 25 August 2010 Dangote Becomes Largest African Investor in S. Africa Dangote Industries Limited has formally increased its stake in Sephaku Cement, which is based in South Africa, from 19.76 % to 64%. The transaction, which comprises a R779 million investment into Sephaku, is the largest ever foreign direct investment by an African company into South Africa. Source: Business Day 12 December 2011 Nakumatt Pushes Further into Africa Kenya-based supermarket chain Nakumatt on Saturday took another step towards its goal of becoming a Pan-African retailer when it opened its first outlet in Tanzania. The company now has a presence in four African countries, namely Kenya, Uganda, Rwanda and Tanzania. An outlet in Burundi is also on the cards. Source: Daily Nation (Kenya) 31 July 2012 Shoprite Takes On the DRC! Africa’s largest supermarket group, Shoprite, entered the Democratic Republic of the Congo (DRC) with the opening of a supermarket in the capital Kinshasa. The South African company has been planning to enter the DRC since 2007, according to a report by Cedric Bra, retailing analyst at Euromonitor. Source: Bloomberg 25 September 2012 Tiger Brands Buys 63% stake in Nigerian Flour Mills Consumer goods firm Tiger Brands said on Tuesday Nigerian authorities had cleared its R1.5bn purchase of a majority stake in Nigeria’s Dangote Flour Mills. The deal is Tiger Brands' third and the biggest yet in Nigeria. Source: Finweek 22
  23. 23. 03 Why the Changing Perceptions?
  24. 24. Why the Growing Interest in Africa? ➜ Positive macro-economic growth prospects ➜ Improving political dynamics ➜ Fewer bullets, more ballots! ➜ Rapidly reforming business environments ➜ Positive demographic shifts ➜ Large youthful population, growing urbanisation, Diaspora influence ➜ Growing economic engagement with BRICSA ➜ Has created new business allies for the continent with a different risk appetite ➜ Compelling Western investors to play ‘catch-up’ to counter growing BRICSA influence ➜ Shifting mainstream perceptions of Africa globally ➜ Growing appreciation of Africa as a viable business proposition 24
  25. 25. Most of the World’s Ten Fastest-Growing Economies are African… Annual average GDP growth, % 2001 - 2010† 2001 - 2015‡ Angola 11.1 China 9.5 China 10.5 India 8.2 Myanmar 10.3 Ethiopia 8.1 Nigeria 8.9 Mozambique 7.7 Ethiopia 8.4 Tanzania 7.2 Kazakhstan 8.2 Vietnam 7.2 Chad 7.9 Congo Brazzaville 7.0 Mozambique 7.9 Ghana 7.0 Cambodia 7.7 Zambia 6.9 Rwanda 7.6 Nigeria 6.8 † 2010 estimate ‡ Forecast Sources: Economist Intelligence Unit, 2012; International Monetary Fund (IMF) 25
  26. 26. Increased Urbanisation and a Growing Consumer Class Sub-Saharan Africa: Urbanisation Rate (%): 2000-2050 Segment Income Market Value (2000-15, USD Billion) Source: Accenture, 2011 26
  27. 27. African Countries Becoming More BusinessFriendly than Before Number of key Doing Business reforms making it easier to start a business (2006-2013) Source: World Bank Doing Business Report, 2013 27
  28. 28. Growing Democracy: Fewer Bullets, More Ballots Number of Democratic Countries in SSA* 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Fund for Peace; *Number of countries holding elections 28
  29. 29. Positive Economic Outlook Africa will continue to be fastest growing region in the world, after Asia Real GDP Growth (%): Developing Regions 14.0 12.0 10.0 8.0 Sub-Saharan Africa 6.0 Central & Eastern Europe 4.0 Developing Asia 2.0 Latin America & the Caribbean Middle East & North Africa 0.0 -2.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -4.0 -6.0 Source: IMF World Economic Outlook, April 2013 29
  30. 30. 04 Thoughts on Investing in Africa
  31. 31. Some Observations on Successful Investing in Africa ➜ Identify the opportunities first, then look to mitigating the risks ➜ ➜ ➜ The ‘glass is half-full’ (vs. ‘half-empty’!) approach Requires a mindset shift Do your homework extensively ➜ Thorough local market research critical ➜ Generalised pre-suppositions/anecdotes won’t cut it ➜ Be willing to put your money where your mouth is (No risk capital, no return!) ➜ Take a ‘portfolio’ approach to investing ➜ A multi-country focus is much better than a single-country bias for risk mitigation ➜ Never compromise your ethics ➜ A long-term approach is critical ➜ ‘Over-night success’ stories are few and far between 31
  32. 32. 05 What are the Challenges?
  33. 33. The Lingering Challenges ➜ Slow pace of economic diversification and industrialisation ➜ High reliance on primary commodities – agriculture, oil, raw minerals ➜ Agricultural potential still largely untapped, financial markets very shallow, etc. ➜ Low levels of formal employment ➜ Human development indicators still lagging ➜ ➜ Poor infrastructure ➜ ➜ Unreliable electric power supply, ports, road and rail links Weak institutional capacity ➜ ➜ Per capita incomes, access to education, health, sanitation, technology utilisation, etc. Public policy planning and execution, judicial, regulatory, customs and border management Political and economic reforms still need to be accelerated and sustained 33
  34. 34. Human Indicators Lag Other Regions, Overall Number of people in extreme poverty by region and selected countries, base case and accelerated progress scenarios, 2010-2050 (millions)* Source: UNDP Human Development Report, 2013 *As per Human Development Report Office calculations. ‘Extreme poverty’ is defined as $1.25 to survive on a day in purchasing power parity terms. 34
  35. 35. Human Development Index (HDI) and Components by Region and HDI Group (2012) Source: UNDP Human Development Report, 2013 *As per Human Development Report Office calculations. 35
  36. 36. Electric Power Supply and Access to Technology Electric Power Generation Lags Other Developing Regions Internet Penetration Still Among the Lowest, After South Asia 36
  37. 37. Road Infrastructure Paved Roads as % of Total Road Network 90 80 70 60 2005 50 % 2011 40 30 20 10 0 Middle East & North Africa South Asia World Average East Asia & Pacific Latin America & Sub-Saharan Caribbean Africa 37
  38. 38. In conclusion… “A good investor invests where the Alpha is. A great investor invests where the Alpha is going to be.” – Michael McMillan 38
  39. 39. THANK YOU 39
  40. 40. Disclaimer Information and Content The information and content (collectively 'information') provided herein are provided by STANLIB Asset Management (“STANLIBAM”) as general information for information purposes only. STANLIB does not guarantee the suitability or potential value of any information or particular investment source. Any information herein is not intended nor does it constitute financial, tax, legal, investment, or other advice. Before making any decision or taking any action regarding your finances, you should consult a qualified Financial Adviser. Nothing contained herein constitutes a solicitation, recommendation, endorsement or offer by STANLIBAM. Copyright The information provided herein are the possession of STANLIBAM and are protected by copyright and intellectual property laws. The information may not be reproduced or distributed without the explicit consent of STANLIBAM. Disclaimer STANLIB has taken care to ensure that all information provided herein is true and accurate. STANLIB will therefore not be held responsible for any inaccuracies in the information herein. STANLIBAM shall not be responsible and disclaims all loss, liability or expense of any nature whatsoever which may be attributable (directly, indirectly or consequentially) to the use of the information provided. STANLIB Asset Management Limited Registration No: 1969/002753/06. A Financial Services Provider licensed under the Financial Advisory and Intermediary Services Act, 37 of 2002. FSP license No: 719. 40