Nvest Financial Holdings

NVEST FINANCIAL HOLDINGS

NVEST FINANCIAL HOLDINGS

Fully-Fledged

In the Art of Financial Services PRODUCTION: William Denstone

A full financial services group, NVest Financial Holdings offers solutions for the full spectrum of its clients’ financial needs. Maturing all the time, the company now has in excess of R30 billion in assets under management and a broad range of companies under the NVest brand. CEO Anthony Godwin takes us through NVest Financial Holdings’ story of acquisition and diversification, at an exciting time of opportunity for businesses in South Africa. www.enterprise-africa.net / 3

INDUSTRY FOCUS: FINANCE

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Established in Port Elizabeth in 1985 as NFB Financial Services Group, following nearly 30 years of growth and change, NVest was incorporated as a private company under the name NVest Financial Holdings (RF) Proprietary Limited and converted to a public company at the end of 2014.

The core subsidiary companies of the Group are NFB Private Wealth Management and NVest Securities, private wealth and investment management businesses respectively, and both of each have excellent track records in managing client monies.

The complete service offering of the Group is fairly unique in South Africa: that it has its own stock broking company which is an equities member of the JSE Limited means that it is able to leverage this core strength, both in its product offering within that stock broking company and the financial advisory businesses.

NVest Securities is a traditional stock broking company focusing on private clients, managing both local and offshore discretionary

Anthony Godwin CEO NVest Financial Holdings

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equity portfolios and offering a broad range of local and offshore investment portfolios to meet the needs of individual clients. NFB Asset Management manages the assets of NFB’s local and foreign collective investment schemes CEO Anthony Godwin joined NFB Private Wealth Management in 1988, three years after its inception, and was later part of the team behind the formation of NVest Holdings, into which company the existing NFB entities were purchased.

“NVest Holdings was the vehicle we used to list on the Johannesburg Stock Exchange (JSE),” Godwin explains of the rationale behind the Group’s creation.

“NFB Private Wealth Management is our only private wealth management business, and contributes close to 50% of the Group’s profits,” he details.

“The rest of the Group is made up of the securities, property and short-term insurance arms. Properties provides around 10%, NVest Securities stands at in the region of 35% while our short-term insurance and various others concerns make up the balance.”

// WE HAVE A LARGE FIDUCIARY BUSINESS AND WE REALLY CAN CATER FROM CRADLE TO GRAVE // CRUCIAL JSE LISTING 2014 was rather a watershed year for the nascent NVest Financial Holdings, seeing its staff complement exceed 100 and total discretionary assets under management surpass R6.5bn.

The following year was arguably more significant in the Group’s history, however, in terms of its burgeoning growth, market share and overall structure.

One of the things that made 2015 so vital a year, and going on to prove something of a catalyst to the overall maturation of the business, was NVest Financial Holdings listing on the JSE. Opting for the AltX board, an alternative public equity exchange for small and medium-sized companies in South Africa, was intended to allow NVest to

NVEST FINANCIAL HOLDINGS

increase its reach, raise its public profile and increase the liquidity of its shares, all of which have been borne out many times over.

Since its establishment in 2003, more than 100 companies have listed on AltX, giving them access to capital while providing investors with exposure to fast-growing smaller companies in a regulated environment.

“We are pleased that the company has chosen the JSE as an enabler of its future growth ambitions,” commented JSE head of Capital Markets Donna Oosthuyse. “We wish to congratulate NVest on their listing…[it] is a natural progression for NVest.”

Anthony Godwin added: “We have an opportunity to take a business which started 30 years ago in the Eastern Cape to the South African market and grow it into a brand recognised throughout the country. The NVest Financial Holdings Group has an experienced and sizeable investment process team as well as a formidable distribution network in its current markets and looks forward to growing from strength to strength as an JSE Limited Alt-X Listed company.”

COMPREHENSIVE SERVICE OFFERING “Private wealth is really the main function of our business,” says Godwin, and with this segment of the group contributing half of its total funds, it would be difficult to argue otherwise. Formed in 2005 and today one of South Africa’s leading asset management outfits, NFB Asset Management is positioned at the forefront of the discerning investor landscape. “NFB is the main driving force behind the business.

“The processes behind its success remain largely the same,” Godwin goes on. “The private wealth business is well-established and the procedures have been in place for quite a long time, although we continue finessing them.

“We have moved to a new system, for example, which controls how we offer advice and how we manage clients. It is really just a case of how we

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INDUSTRY FOCUS: FINANCE

improve our existing structure and our offering to the public on an ongoing basis: as the regulatory environment is moving and as optionality is moving for investors, we as financial advisers need to move in line with that.”

Although a key part, however, it is exactly that: one vital arm among many others, and Godwin goes on to clarify that what gives NVest Financial Holdings its strength is its ability to offer the full range of services to a broad spectrum of investors. “I think we are definitely there in our aim to be a complete one ‘stop shop’ for the investor,” he says.

“We have a large fiduciary business

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and we really can cater from cradleto-grave. Our capabilities range from financial planning and education policies, through investment planning and general wealth creation right to retirement and wills and estates.”

With such a strong framework already in place, Godwin explains that, as it has done throughout its history, key for NVest Financial Holdings now is to develop and strengthen its current provisions. “It is really just a case now for us of broadening the scope of products and offerings within the businesses,” he explains.

“This is what originally prompted

the acquisition of the securities business. As a private wealth business, we were outsourcing a lot of that work in the planning stages, and as we got bigger it really just made sense for us to acquire and grow our own stockbroking, or securities, business.”

“It was a similar story with our asset management business,” Godwin continues, of the organic way in which NVest has grown into the force we see today. “In the private wealth management side we were using a lot of the bigger companies, and then some 15 or 16 years ago we decided to form our own; this now manages around 25% of the assets we hold within our own private wealth segment.”

Just as it offers the broadest range of service offerings, NFB caters to a diverse body of consumers, Godwin tells us. “We do have a large number of financial planners who target high net worth individuals (HNWIs), and we grow that base on a daily and a weekly basis. We are not exclusively HNWIfocused, however. We do not have a set amount which is required for someone to be a client of NFB. While the target market for most financial advisors is the high net worth market, we do not restrict ourselves.

NVEST FINANCIAL HOLDINGS

“In the East London or Eastern Cape area, for example, the majority of our client base are not HNWI,” Godwin continues. “We have a wide net and we look after a lot of people who are middle-income individuals, and this is actually where the financial planning need is greatest - the lower to middle end - and it is vitally important to plough time into that segment of the market as well.”

BUSINESS IS BOOMING There was much to celebrate at the release of NVest’s most recent set of figures. Among the headlines were increases in revenue of 5.29% to R306.3 million, headline earnings growing by 10.79% to R65.95 million, and a Net Profit After Tax increase by 7.76% to R64.8 million. This has all been amid tough market conditions, which as Godwin tells us, are already showing signs of improving.

“The reality of where we are economically is that we are feeling the effects of the last 10 years,” he begins, “and I don’t think it is realistic to think that any negative effects can be undone instantly. But there is a positive mood in the country, and steps have been taken

by Ramaphosa that are positive.

“It is clear that the message going out to foreign investors and to the rating agencies is ‘wait and see’, but although things are happening perhaps slower than we would like, there is still an optimistic feeling that there will be a good outcome.

“A big change that has come along with Ramaphosa is his relationship with business,” Godwin continues. “He has reached out to businesses and I think that we realise ourselves that it is politics and policies which are going to be central to changing the flow of capital into South Africa.

“Unless government really focusses on change and improvement in terms of foreign investment into the country, we will continue in our sideways movement. If we do see more of the change that we have seen in recent weeks, though, which helps drive the Rand into a stronger position, then this will in turn drive up our market.

“Worldwide, there is a drive for yield and South Africa as an emerging market has been historically attractive for foreign investment flows. Perhaps our negative political position over the last number of years has seen outflows from South Africa, but we are hopeful now that this trend will reverse and will

see this investment start to come back into the country.”

So well-positioned does NVest find itself after all these years, that when it comes to its geographical footprint, little is set to change, Anthony Godwin concludes. “At this stage, we are happy within the territory of South Africa,” he underlines. “At this point in time we have no plans, nor work in progress to extend our footprint out of South Africa.

“That is where we are, and we are growing within the offices we already have. We are looking to develop our presence within the areas where we already are established, and we still see much scope for further expansion and success right here in South Africa.” Maximising its existing assets and developing its capabilities in line with these; this has been the pillar of NVest’s triumphs to date, and we look forward to seeing what the future holds for this mainstay of South African financial expertise.

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