FirstRand to expand its asset management business division

FIRSTRAND plans to grow its asset management business as it widens revenues from business segments that require less regulatory capital.

Group CEO Sizwe Nxasana said on Thursday in an interview the asset management business already had assets under management and administration of about $100bn.

The plan was to progressively grow these assets in South Africa and sub-Saharan Africa over the next few years, Mr Nxasana said at the conclusion of FirstRand’s annual general meeting in Sandton.

The asset management business was being run through Ashburton Investments, a unit of FirstRand.

"We have about R100bn in assets under management or administration. It is a business we think there is opportunity to create more scale by leveraging on the internal skills we have," Mr Nxasana said. "We want to originate business in various asset classes such as equities, real estate and infrastructure in South Africa and Africa," he said.

Mr Nxasana would not say what the target value of assets under management was for Ashburton over the next few years. "We have a base from which to start growing the business but this is a journey rather than a process," he said.

Mr Nxasana also said FirstRand would next year prefer to concentrate on investing in the businesses it had or planned to establish outside South Africa.

"We have projects in Mozambique, Tanzania, Nigeria, Ghana, Zambia and India which gives us more than enough to focus on," he said.

Speaking at the annual meeting, FirstRand non-executive chairman Laurie Dippenaar said the group’s remuneration strategy was neither excessive nor did it reward failure.

Group executives were paid on the basis of them achieving targets such as creating shareholder value by increasing return on equity.

Mr Dippenaar said in FirstRand’s annual report released at the meeting that some global banks produced return on equity that was well below cost of capital but paid executives and staff up to 80% of the return. FirstRand’s return on equity was on the other hand about 20% and it paid out 45% of that to executives and staff.

Source: Business Day