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Western Cape Business 2021

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  • Overview
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The 2021 edition of Western Cape Business is the 14th issue of this highly successful publication that, since its launch in 2005, has established itself as the premier business and investment guide for the Western Cape. The Western Cape has several investment and business opportunities. In addition to the regular articles providing insight into each of the key economic sectors of the province, a special feature on thriving agricultural exports gives insight into the details of what fruits and wines go where. An interview with the Port Manager of the Port of Cape Town provides more understanding of the scale of the logistics operation that is a major port. Another special feature examines the City of Cape Town as a national headquarters for the thriving asset management sector. The cover picture reflects an exciting new find of gas condensate off the south-eastern coast, a potential game-changer for the Western Cape and South African economies. This new development is covered in the overview of the oil and gas sector.

SPECIAL FEATURE

SPECIAL FEATURE Cape Town is South Africa’s asset management capital The strength and diversity of the Cape’s financial services underpins a vibrant sector. The venue for the 2019 Raging Bull Awards for collective investment schemes was the Cape Town International Convention Centre – which meant that the winners did not have to travel far to collect their trophies. Cape Town is South Africa’s asset management capital. Cape Town also, according to the Global Financial Centres Index (GFCI), ranks second in Africa in 2020 (behind Mauritius) in competitiveness as a financial centre. The ranking is an aggregate of indices covering five things: business environment, financial sector development, human capital, infrastructure and reputation. Of the 20 finalists named for the 2020 Morningstar South Africa Fund Awards, 13 have their headquarters in the Cape. Seven of the top 10 managers in the Plexcrown Ratings of 2019 are based in Newlands (MiPlan), Victoria & Alfred Waterfront (Allan Gray, pictured on the next page), Claremont (Coronation), Bellville (PSG and Boutique CI), Pinelands (Old Mutual) and Westlake (Prescient). The diversity of locations in Cape Town mirrors the range of products offered. South Africa now has over 1 000 registered unit trusts through which investors have access to money markets, domestic equities, bond markets and overseas markets, among others. The categories in which awards are presented give insight into the range. The fund categories (and Cape Town finalists) for the 2020 Morningstar awards were: CATEGORY Best Aggressive Allocation Fund Best Bond Fund Best Cautious Allocation Fund Best Flexible Allocation Fund Best Moderate Allocation Fund Best South African Equity Fund Best Fund House (Larger Fund Range) Best Fund House (Smaller Fund Range) WESTERN CAPE FINALISTS Kagiso Balanced Allan Gray Bond Kagiso Stable Coronation Optimum Growth Sanlam Managed Moderate Fund of Funds Kagiso Equity Alpha Investec Asset Management (now Ninety One) and Sygnia Asset Managers Fairtree Asset Management and Kagiso Asset Management The 2019 Raging Bull Awards, which were held in January 2020, awarded “South African Manager of the Year” to MiPlan and “Offshore Manager of the Year” to Nedgroup Investments. Runnersup in the South African category were Ninety One and Prescient. Other Raging Bull winners for outright performance over three years were Kagiso Equity Alpha (General Equity Fund), Truffle SCI Income Plus (Interest-bearing Fund), BlueAlpha BCI (Global Equity General Fund), and Fundsmith (Offshore Global Equity Fund). For riskadjusted performance over five years the winners were Fairtree, Kagiso Protector, Long Beach Flexible and Platinum Global. A global trend also present in the Western Cape is the growth of the smaller company. Writing for citywire. co.za in 2020, Patrick Cairns noted that the market share of South Africa’s seven largest managers slipped from 64.8% in 2014 to 60.7% in 2019. Cairns highlighted the leap in assets under management (AUM) of Cape Town-based Prescient in the five years to 2019 – a noteworthy increase of 178.1%. WESTERN CAPE BUSINESS 2021 16

SPECIAL FEATURE Another trend is the growth in offshore investing. The Business Times in the Sunday Times reported in 2020 that the all-share index of South Africa’s primary stock exchange, the JSE, had grown by less than 5% in five years. By comparison, the US’s S&P 500 was 72% higher. However, Jacques Plaut of Allan Gray, which manages more than R500-billion, is quoted saying, “If the crowds are extremely fearful of something, don’t sell SA Inc without evaluating the stocks on the facts and the merits of each case.” The stellar performance of the Capitec share price is noted, as is the fact that some companies will benefit from a weak rand. Reporting on a recent analysis of the global asset management sector from the Boston Consulting Group, Cairns flagged alternatives as an area of future growth. BCG anticipates alternatives rising to nearly 50% of revenues in four years, up from less than a fifth of AUM which they currently constitute. Old Mutual Alternative Investments (OMAI) invests in infrastructure, private equity, affordable education, housing and fund of funds. The OMAI IDEAS Fund is a regular investor in renewable energy projects. Contribution to GDP The financial services sector was the single largest contributor to regional gross domestic product (GDP) in 2016. With a value of R43-billion in that year, a consistent growth rate over a five-year period of 3.8% and inward investment of more than R2-billion in the same period, the financial services sector punches above its weight. This is also true nationally, where Cape Town’s share of national employment in the financial sector is about 20% and the contribution to gross value-added (GVA) is 15%. Cape Town asset managers are operating in an area that has historically been strong in banking and finance. The city is host to the headquarters of large insurance companies such as Metropolitan, Old Mutual Africa, Santam, Direct Axis and financial services groups such as Sanlam, PricewaterhouseCoopers and Allan Gray. Credit: VDMMA (Van der Merwe Miszewski Architects) More recently, the city has become home to several financial technology (fintech) incubators: according to Tracxn there were 154 fintech startups in Cape Town in 2019 and French Tech Labs operates out of Century City. The region’s three tertiary institutions provide a sound educational base for the financial sector, with a more specific business focus being afforded by the University of Cape Town Graduate School of Business (GSB), the University of Stellenbosch Business School (USB) and the School of Business and Finance (SBF) at the University of the Western Cape. TSIBA Business School offers undergraduate and postgraduate business qualifications as well as informal short courses in leadership, entrepreneurship and commerce. TSIBA stands for Tertiary School in Business Administration. ■ 17 WESTERN CAPE BUSINESS 2021

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