Mark Lamberti has moved from retail to financial services and believes there are some similarities between the two.
Selling a washing machine to a housewife and granting a loan to a new taxi operator may seem quite different, but Lamberti, the former Massmart chief executive and now head of the newly listed mass-market financial services group Transaction Capital, says they do have some links. The types of services he is talking about succeed on high volumes, sophisticated technology and slick operations that understand that amorphous seeming mass market.
Transaction Capital, which listed on the JSE on June 7, has carved out a niche by finding and focusing on businesses that have tapped into “underserved” markets, possibly because other operators have either avoided them or missed their attractions.
Its main businesses could even be called somewhat obscure and certainly diverse: unsecured lending with a bias to loans for cellphones, ATMs in underserviced and often remote areas, loans to start-up taxi owners and debt collection, having bought the books of uncollected debts from some major banks and retailers.
But Lamberti said the common thread running through Transaction Capital was financial services in markets in which these products were not available, the volumes were large and they could be managed with superior credit-risk management and sophisticated proprietary technology. “My partners and I are finding interesting ways to source a market, mitigate risk and generate profit,” he said.
Areas of high risk
Although most of the businesses could be considered to be operating in areas of high risk, Lamberti said they were mitigated by, among other things, employing some of the best minds around. “We have a deep pool of talent combining technical expertise with heavyweight experience. Some of our senior people have managed much bigger assets in far larger companies, such as some of the retailers and the banks.”
Lamberti now often collaborates rather than competes with these former employers. “We compete with the likes of Capitec and African Bank Investments in our unsecured lending business, while in the collection part of our business some of the major banks are, in fact, our clients,” he said. “Most of the ATM business is conducted in remote locations where banks have no real interest. We provide the infrastructure and give them 97% uptime, so the banks are happy.”
In the first-time taxi operator financing business, Transaction Capital is working alone so far.
Mr Massmart seems quite at home in his new role, doing what he is good at, namely strategising and leading. He never really fitted the public type of retailer’s style or image, such as former Checkers chief executive Clive Weil’s “twolley for twolley” or even Raymond Ackerman’s “housewives’ friend”. Instead, he is known for his thinking and careful planning. Having left his long-standing job at Massmart in 2007 – he spent 19 years as chief executive – Lamberti joined Transaction Capital a year later after spending his time out of mainstream business doing things such as running Business Against Crime and even sitting on the Telkom board.
“I couldn’t see myself staying at Massmart until I retired. I wanted to do something different with the next third of my life,” he said. “It was starting to become repetitive and I wasn’t learning anything new.”
Where the action is
Lamberti resigned on June 30 2007 and by the next day he had left his office. Although he likes to be where the action is, he said he had no regrets about his departure from Massmart so soon before the company was engulfed by negotiations with United States retailer Walmart and was then taken over. “I am now Massmart’s nonexecutive chairman and am happy to contribute in that way.”
But if he was not Mr Massmart, he was certainly Mr Retail. His father and brother were developing retail property in KwaZulu-Natal when he was first looking for a job. They opened a shop in Newcastle selling hi-fis and electrical appliances and Lamberti joined the business.
“I soon realised I wanted something which was more intellectually challenging, so I left to join (retail furniture chain) Bradlows.” Six years later he was running the group.
He said he brought to Transaction Capital the “normal things” a chief executive would be expected to contribute, such as strategic thinking, but also knowledge of the mass market. “I’ve had to learn the nuances of financial services, but much of what we do can be related to the retail industry.”
One of the things Lamberti is sure to emulate from his Massmart days is growing the group through acquisitions. He has already restructured Transaction Capital, closing six businesses, buying five and merging three, all so that it had the clear strategy and good focus it needed to list and raise the funding it wanted. However, Lamberti said the main reason for listing was not to raise capital, but rather to ensure the company was perceived as a well-regulated financial services group complying with all the stringent corporate governance requirements of a listed company.
Although Lamberti said he could not talk about acquisitions or growth plans apart from what could be found in the pre-listing statement, he admitted to being an “Africa bull”, believing “big opportunities” existed on the rest of the continent where similar concepts could be adapted to underserved markets.
The wholesale market
He does not completely write off the idea of taking deposits in the future – usually banks’ main source of financing for lending – but he prefers to raise funding on the wholesale market. “The idea of being a bank doesn’t make sense to me. I prefer the model of using long-term finance to fund short-term loans. It means we are unlikely to get into a liquidity squeeze.”
Although Lamberti clearly understands the intricacies of the world of large corporates, having managed Africa’s third-largest retailer that employs 28000 people, he has also been lauded as an entrepreneur. He believes a successful entrepreneur is someone who uses the opportunities that present themselves beyond the resources available to him – someone who sees an opportunity and then, “in a sequential way, overcomes all obstacles”.
Lamberti wrote the Massmart strategy soon after the group was formed and the same strategy existed the day he left. “It was crystal clear,” he said.
But he believes an entrepreneur need not necessarily take huge risks: “I am actually very risk-averse.”
Entrepreneurs also have to have good leadership skills. Unlike most dictators and some chief executives, Lamberti thinks leaders have an obligation to adapt to their followers.
“As a leader, you are not necessarily the chief decision-maker, but a facilitator of decisions from high-quality people who most often know more than you do.”