T H E V A L U AT O R G R O U P
THE VALUATOR GROUP
Core Values PRODUCTION: Colin Chinery
With acknowledgement to the real estate maxim about location, location, location, for business, it’s all about value, value and value. “It’s absolutely crucial for individuals, boards, shareholders and investors to rely on the soundness of valuations,” says Gavin Commins, CEO of South Africa’s leading brand, The Valuator Group. 2 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
//
The 2008 global financial meltdown triggered by the collapse of Lehman Brothers – and resulting economic fall-outs pushed the world’s banking system towards the edge of collapse. In South Africa, the economy fell into recession for the first time in 19 years, nearly a million jobs were lost in 2009 alone, and house prices, manufacturing, and mining activity shrank. And with governments pumping billions into stricken banks, and many high-profile companies questioned for misrepresenting their assets, the crisis brought another sea of change - a demand for better corporate governance, with robust and independent regulated valuations near the top of the reform agenda. “It’s absolutely crucial for individuals, boards, shareholders and investors to rely on the soundness of valuations,” says Gavin Commins, CEO of The Valuator Group (TVG). “With the 2008 world stock market crash, the whole world woke up to regulation, corporate governance and sound business values. IT’S ALL ABOUT VALUE “Valuation is now seen in terms of, what is a company? - whether private or listed - and how does it grow
// WE LOOK AT THE SERVICES WE OFFER AS A LONG-TERM RELATIONSHIP WITH CLIENTS. YOU ARE DEALING WITH THE HEART AND SOUL OF A COMPANY, AND THE HEART AND SOUL OF A HIGH-NETWORK INDIVIDUAL // 4 / www.enterprise-africa.net
its wealth? It’s all about value, and valuations play a key part in this. “And then you’ve got the whole issue of transparency and reporting to make sure everything is correct for the stakeholders. “Up to fifteen years ago valuations were a kind of old man’s profession and career. But now it’s become a highly demanding and sought-after profession where many complex issues need to be resolved in terms of fair value whether for sale, mergers and acquisitions or financial reporting.” A one stop shop across highly varied, often complex segments of the economy, TVG’s team of experts perform valuations covering the full segment in the property space, movable assets like plant & machinery and works of art amongst other specialised assets for projects of any type or size throughout South Africa, and into Africa, the Indian Ocean Islands, and the UAE. The portfolio spread is impressive; covering virtually every sector in the economy which includes commercial and industrial, hospitality, mining, banking, agriculture and many others. “We are one of the few valuation companies - certainly in South Africa and probably in Africa - that offers the full gambit of valuation service for property (high end residential, commercial, industrial and retail), plant, machinery, equipment and technical assets and works of art covering art and antiques including jewellery,” says Commins, TVG Founder, with a strong background as a CEO, and also consultant to large international companies ranging from finance to construction. GOING GLOBAL Established in 2007, the Group has grown from a Cape Town-based operation to become a national, and global operation, with offices in Durban, Johannesburg, Port Elizabeth, Dubai, and Lagos, Nigeria with others to be announced soon.
// VALUATION IS NOW SEEN IN TERMS OF, WHAT IS A COMPANY? - WHETHER PRIVATE OR LISTED - AND HOW DOES IT GROW ITS WEALTH? IT’S ALL ABOUT VALUE, AND VALUATIONS PLAY A KEY PART IN THIS // “We started from a small base and grew accordingly, offering a package of valuation services where we could see there was need and market potential.” It is crucial says Commins, for individuals, boards, shareholders and investors to rely on the soundness of valuations. “They need robust and credible valuations, and we build relationships through trust and integrity in the best interest of our clients.” Twelve years on, does The Valuator Group now rank as one of South Africa’s leading independent valuation business? “I would very much say so as one can see from the companies we work for mentioned on our website under references.” TVG’s one stop shop offers specialisation and convenience. Cost-effectiveness too. “Take a factory in need of assessing for insurance purposes, its two main assets - the building, and plant and equipment. “The valuation can be undertaken by two different companies, or by our one stop shop, offering both expertise and cost benefits. “With the types of client we work for, and the spread of sectors, that’s the uniqueness we offer.” Operating in both market and insurance segments, TVG valuers use personal expertise, experience, extensive research and acceptable
THE VALUATOR GROUP
methodology in accordance with International Valuation Standards to attain realistic values of assets. “Many people think that insurance values are the same as market values,” says Commins, “but of course they are completely different. “There is no international obligation to have your assets valued for insurance purposes, other than what your insurance needs are but it is important that clients are comfortable that their assets are accurately valued at all times. “But for market purposes, particularly for financial reporting if you are a listed entity, one requires assets to be valued according to IFRIS regulations. And with all that’s been going on, accounting firms are now themselves loathed to take and value specialised assets, so they get us to do this for them as professionals.
“BROKERS LOVE US” “Brokers are our biggest clients - they love us simply because they want their clients not to have issues down the line.” But if detached from stringent market-place obligations, the importance of precise valuations in the insurance sector cannot be overstated. “Insurance companies are very quick to apply their average clause, a complicated formula that effectively means the client is under-insured in the event of a claim.” So why take that risk? Far better says Commins, to have insurancerelated assets valued every year, a service The Valuator Group offers with its low-cost Five-Year Long-Term Assistance Plan. This ensures assets are correctly valued during this period, with the fee effectively spread over the five years, or longer as negotiated.
“It gives everyone peace of mind, both the broker representing the client, the insurer, and most importantly of course, the client. “We believe valuation shouldn’t be a one-off, it should be a relationship developed between us and the client over a period to maximise the service and costs.” WATERPROOFED QUALIFICATIONS A MUST And that relationship should be underpinned by the highest professional qualifications. “Clients should ensure that their Valuer or valuation company is not only qualified but registered with the correct bodies such as the South African Council for Property Valuations Profession, the South African Institute of Valuers, or from an international perspective, the Londonbased, internationally accredited Royal
www.enterprise-africa.net / 5
INDUSTRY FOCUS: FINANCE
Institution of Chartered Surveyors. “The company should also provide valuers who have knowledge and experience in carrying out valuations for specific assets, such as aeroplanes, classic cars, jewellery, antiques and fine art. It’s important to marry the valuer to the required field. “With a top specialised division covering many different categories Fine Arts valuations has grown substantially over the last five years where today we assist clients selling collections, and since we are paid commissions by the chosen platform, whether a gallery, auction house or whatever, often at no cost to the client.” While the property market is highly regulated, fine arts is among those in the asset space where there are only a few accredited qualifications. “It all comes down to experience, and in art you need a whole range of specialist experts. And we have got the right people - a key factor.”
6 / www.enterprise-africa.net
MOVING ON Expanding from its strong valuations’ presence, TVG is looking into adding additional related services with its initial focus in the mining sector. “There is also a lot of opportunity on the risk advisory side as well which we are looking at,” says Commins. TVG has just completed a valuation case involving a listed mining house closing a mine and selling off the moveable assets. “Following a dispute between the purchaser of the plant and equipment, and the mining house, we were employed by the attorneys to put our estimate of fair value on the table to sort out the dispute. “So, valuations are not just for market or insurance purposes - there are other reasons why valuations are needed,” explains Commins. TVG’s global expansion has seen offices opening with success in Nigeria
and Dubai. “Dubai is a different market to what we are used to, with neither companies nor individuals paying tax, for example.” The Dubai operation was prompted by the oil crisis when low prices awakened many Middle Eastern investors to the dangers of having all their eggs in a single basket. “They were looking to expand their investment base, and a lot were looking at Africa. We wanted to be there, holding the hands of potential investors, particularly if there was not a reputable financial services company behind the particular deal. “We also wanted to take advantage of the Middle East market itself - and the potential there has still to be realised. It’s a difficult market, however, we are there but do need strengthen our team and are looking for key individuals to join us.”
THE VALUATOR GROUP
AFRICAN OPPORTUNITIES In Africa, aside from Nigeria and the DRC, the Group has a representative in Mauritius, and will be shortly setting up in Namibia and Ghana. “While Mauritius is a very small country with just over a million people, it has been very successful in setting up a financial services base with very attractive tax rates for both individuals and companies. “A lot of corporates have set up in Mauritius and running their head offices from there. We are looking not only at the Mauritius market - which itself is quite small - but also the spin offs from corporates that have set up there in sectors from mining to
// AT THE END OF THE DAY, IT’S ALL ABOUT PERFORMANCE AND VALUE //
hospitality and with a lot of operational entities in Africa. “Our aim is to have a footprint right throughout Africa and the Indian Ocean Islands.” While the Group focuses on valuations, whatever the transaction, there has to be a value attached to a business, whether based on income or net asset value, says Commins. “And we are there as a wholly independent, arms-length valuation company, with no interest whatever in the deal, from either a sellers or purchasers perspective. “We look at the services we offer as a long-term relationship with clients. You are dealing with the heart and soul of a company, and the heart and soul of a high-network individual.” Clients, stresses Commins, do not want matters of high confidentiality “travelling around the world. They want to trust you and be able to work with you and your team.”
BOOM TIME FOR TVG Meantime the South African economy is still battling with economic growth, low or non-existent, tax revenue collection repeatedly below forecasts, and debt levels increasing at alarming rates. But the valuations profession is a sector for all seasons, an indispensable precision instrument for economic activity, veracity, governance, and ultimately, success. “We are very fortunate,” says TVG’s Group CEO. “In the current political and economic environment, South Africa is going through some big challenges, but we have been booming for the past two or three years. “Our business is not bullet proof, but in bad times and good times, there’s always going to be the need for valuations. At the end of the day, it’s all about performance and value.”
WWW.THEVALUATOR.CO.ZA
www.enterprise-africa.net / 7
Published by CMB Media Group Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Rouen House, Rouen Rd, Norwich NR1 1RB T. +44 (0) 1603 855 161 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. Š CMB Media Group Ltd 2019
AS FEAT UR ED IN
ENTERPRISE AFRICA
O CTO BER 2019