Mianzo / Finance Focus Q1 2022

CEO and Portfolio Manager, Luvo Tyandela.

SHOT IN THE ARM FOR BLACK SMES

For South Africa’s failure prone SMEs, access to finance is a major stumbling block. But the launch of a R100m SME fund enterprise by Black-owned Cape Town-based asset manager Mianzo, is geared to help emerging entrepreneurs gain access to growth capital.

PRODUCTION: Colin Chinery

INDUSTRY FOCUS: ASSET MANAGEMENT

Wi th five out of seven failing within their first year, and 100% Blackowned businesses notable victims, South Africa has one of the world’s highest SME failure rates.

Th e consequences are stark. With their higher capacity to absorb labour, and a lower average capital cost per job created, SMEs are crucial job creators in a country with high unemployment. South Africa’s unemployment rate hit a historical new high of 34.9% in the third quarter of 2021, up from 34.4% in the second quarter. If the expanded definition of unemployment is used, which includes discouraged job seekers, unemployment rate is sitting at 46.6%.

BI G BUT TROUBLED

SM Es across South Africa represent more than 98% of businesses, employing between 50 and 60% of the country’s workforce across all sectors, and responsible for a quarter of job growth in the private sector.

Ye t access to finance is a major stumbling block, with only 6% of SMEs reporting they have received government support.

But in May, Mianzo, in partnership with SME incubator Black Umbrellas, launched a R100m SME fund enterprise to help emerging entrepreneurs gain access to growth capital.

Kn own as the Black Umbrellas Mianzo SME Debt Fund, it will provide loans to 51% Blackowned SMEs based in South Africa, addressing the low levels of entrepreneurship and high failure rate of emerging businesses in Africa.

BL ACK SME INCUBATOR

In itially spearheaded by Cape Town social entrepreneurs Mark Frankel and Charles Maisel to support SMEs, Black Umbrellas is a development incubation organisation with partners in the private sector,

Government, and civil society.

In 2009, the Cyril Ramaphosa Foundation, then the Shanduka Foundation, partnered with Black Umbrellas to position the project on a national level with a R5.2 million investment.

To day there are nine incubators countrywide, and Ramaphosa, Patron of Cyril Ramaphosa Foundation, is deeply committed to the vision of Black Umbrellas as a catalyst in the development of entrepreneurs, a sector he has identified as critical to the empowerment of historically marginalised South Africans.

NE W BEGINNINGS

Th e Black Umbrellas Mianzo SME Debt Fund is the latest initiative

“WE ARE DEFINITELY LOOKING AT EXPANDING OUR PRODUCT RANGE, AND ON THE EQUITY SIDE WE ARE CONTINUALLY ASSESSING VARIOUS OPTIONS IN TERMS OF WHAT WE CAN ADD TO OUR PORTFOLIO WITHOUT COMPROMISING OUR INVESTMENT PHILOSOPHY”

by Mianzo – ‘New Beginnings’ in Swahili – founded

in 2010 and one of only a handful of Black asset managers in Cape Town.

Wi th the objective of differentiating itself from the big corporates in terms of doing investments, and delivering “certainty in uncertain times,” boutique and bespoke Mianzo is founded on prudent principles, yet with a mindset challenging the status quo.

“We wanted it to be a derivatives investment boutique that provided downside protection to any asset class,” explains founding member, CEO and Portfolio Manager, Luvo Tyandela.

“O ur philosophy is ‘preserving capital, and then search for yield pick-up’. If the market goes down, our portfolios are more robust than others that are growth oriented.

We are more conservative than the big competitors. Our quality value, benchmark cognisant approach attests to this.”

TO P ASSET MANAGERS

Wi th offerings in institutional, global, annuity, and collective investment schemes (CIS) platforms, and currently managing assets just short of R12b, Mianzo is ranked as one of the top Black asset management companies in South Africa.

Ac cording to the 27four BEE. conomics 2021 annual survey, which provides risk and performance data on black asset managers, Mianzo ranks in the top 15 of black asset managers. The firm has been growing by 30% its AUM.

“B ased on the 27four BEE. economics survey, Mianzo is

ranked in the top 15 of black Asset Managers in South Africa,” says Operations Manager, Faldie Isaacs.

“Competition is tough, and it takes a lot of work to move from R1 billion to R5 billion and then on to R10 billion. Yet, based on monthly Alexander Forbes surveys, over the past 12 to 24 months our performance has been greater than most of our competitors, even among non-Black asset managers.”

FL AGSHIP LAUNCHES

It ’s a period that has seen flagship launches propelling Mianzo into the spotlight.

Mi anzo in partnership with 27four Investment Managers, launched two new retail unit trusts with fee structures that rival low-cost passive investment products, Mianzo Equity

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Through our collaborative approach and international perspective, our growing team of financial service experts provide forward-thinking solutions that helps businesses in the financial services sector comply with regulations, manage risks and transform their business.

We deliver tailored services to asset management, banking, real estate and insurance clients.

INDUSTRY FOCUS: ASSET MANAGEMENT

27four and Mianzo CPI+3% 27Four.

Th e retail savings products aim to attract new inflows from historically ignored lower-income communities who can access the products for as little as R199 a month or via a R1,999 lump sum.

An d in another challenge to the asset management establishment, the products charge a management fee of just 0.55%, with no performance fees, a long cry from the total expense ratios of most

established players. Based on internal research conducted by Mianzo, the average management fee in the industry is around the 2% mark.

CO MPASS RESET

Wi th asset managers great and small suffering declines in institutional fund flows as the Covid-19 impact resulted in retrenched workers suspending monthly retirement fund contributions or accessing their funds to make ends meet, the industry has had to re-set its compass.

And with a long-term play focussed exclusively on the shrinking asset pool and increased competition within the institutional space, no longer sustainable, Mianzo has been looking to diversify its revenue streams.

Th is entails building a retail book, bringing in new investors in the lower LSM market, and ultimately playing in the discretionary savings space rather than being only exposed in the retirement space.

It would see Mianzo attracting money from savings pools that traditionally save in bank accounts rather than unit trusts, and would include public servants, women’s groups, and even street vendors.

On e of the key players here is Portfolio Manager Thembeka Sobekwa, holder of a BBus.Sci in Actuarial Science majoring in the field of Quantitative Finance, University of Cape Town.

“I n an industry dominated 99.9% by males, having Thembeka is marvellous for us internally, and we always like to celebrate these positive outcomes in terms of real-life stories,” says Isaacs.

Un surprisingly, this high launch activity has seen increased media exposure. But true to the conservative spirit of Mianzo, Isaacs takes a measured view. “We are seeing success, yet we remain humble, because what goes up can come down.

“COMPETITION IS TOUGH, AND IT TAKES A LOT OF WORK TO MOVE FROM ONE BILLION TO FIVE AND THEN ON TO 10 BILLION”

“We are definitely looking at expanding our product range, and on the equity side we are continually assessing various options in terms of what we can add to our portfolio without compromising our investment philosophy. That is very important.”

UP AND OUT FROM THE CAPE

As with every sector of the country’s investment business, Covid-19 and ensuing crash, hit Mianzo’s assets under management, but acumen, expertise, and resilience are deep within its DNA.

“T hrough the professionalism and dedication of the team, we regained investor confidence throughout those tough pandemic months, with existing clients topping up their investments, as well as onboarding new clients,” says Isaacs.

“O ur response also allowed us to invest in our people in the form of staff promotions, job creation in senior roles, and recruiting new staff.

“I t is not common for people to come into asset management of our size during a pandemic, because in these tough times people are inclined to play safe and stay where they are. But we have achieved this.”

According to Deputy Finance Minister David Masondo, privately held Black-owned asset managers oversee just 9% of SA’s total savings pool.

BL ACK TALENT PLATFORM

It is against this backdrop that a founding mission for Mianzo was the creation of a platform for

talented Black students to learn and receive mentoring and grow.

“S outh African universities are full of such talent. 90% of the people interviewed at Mianzo for an analyst position are Black students, and our criteria is that, on an equal skill set, we will prioritise the student that comes from a disadvantaged background.”

It is a recruitment and training programme that is driving increasing success.

“We have a unique set of investment professionals, a team that remains firm on the principles of our investment philosophy, advancing our continuing success, and with the passion, dedication and commitment to ensure that we operate in the best interest of our clients and our business, based on our pedigree, and the leadership that is steering the Mianzo ship,” Isaacs concludes.

“IN AN INDUSTRY DOMINATED 99.9% BY MALES, HAVING THEMBEKA IS MARVELLOUS FOR US INTERNALLY”

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