Leading the charge for transformation
Established in 2005, Meago Asset Managers has become an example of how successful transformation in the asset management industry can be. Specialising in property equity fund management, Meago has a track record that boasts impressive clients and awards that reflect its principled investment approach.
“The story of Meago started in 2002 when Jay Padayatchi and I were managing a suite of listed property unit trusts at Standard Bank Properties, which at the time was a joint venture with StanLib,” says Thabo Ramushu, executive director at Meago.
“We had run those funds very successfully and had won numerous awards over the years. In 2005, the two of us felt we had gone through the trenches and learnt many important lessons along the way that the time was right to form our own company. Meago was launched with two other partners, with the focus being on the listed property space. The founding directors injected capital without external funding and with a lot of sacrifice financially.”
He says the fact that at the time the listed property sector was quite niche compared to boutique general equity BEE managers helped the company to take advantage of their collective experience and despite a few teething issues, it signed up the Absa Property Fund as a blue chip client within 18 months.
“Absa did not have a listed property offering, so we proposed to launch and manage it on their behalf. The rest is history. During this time we were able to grow the business with several segregated mandates and also won an award with Micropal and Financial Mail Award on behalf of the Absa Property Equity Fund. When Absa decided to go in-house with its fund, we had enough additional business that gave us a stable platform for growth,” he says.
One of the benefits of being in the property sector, says Ramushu, is that it provides clients with a contractual escalation and a stable income and is hence very defensive. In fact, Meago looked at a 20-year history of the sector and found only one year that had a negative total return.
However, it is not an easy path being an empowered asset management company.
“The industry has not transformed to the extent it should have. As can be seen by the study conducted by 27four Investment Managers, BEE firms only manage 4.4% of the total assets in South Africa. Within that number, there is a big spread separating those managing substantial money and those still in the process of gathering assets. And even though there are a few progressive pension funds going out of their way to transform, there has been a general push back to slow their growth,” he says.
Fortunately, there have been a few catalysts in the industry, such as the Public Investment Corporation, which is promoting black asset managers and putting more stringent requirements in place for who manages their money.
“But other big pension funds need to get involved. One should also look at addressing the issue from a young age and identifying candidates at a high school level and guide them into the industry. By providing them with direction and mentoring, black asset management firms will be able to organically increase the numbers in the industry.”
He feels that, as it stands, change is happening too slowly in South Africa.
“We need bigger funds to commit and put targets in place where they use black fund managers to manage a certain percentage of their funds. Once the commitment is there, a shift will happen in the industry.”
For Ramushu, there is much opportunity in the asset management industry in the country. “Meago has shown that it has the staying power and has paid its school fees by continually performing well. This is showing others that we are able to deliver the performance we need for our customers and build a trusted relationship with them.
“The best thing about asset management and transformation is that it is all about performance. You have to deliver on your mandate and by doing so, you are showing the rest of the industry that this is not about BEE but about creating opportunity for all,” he concludes.
This article forms part of a larger supplement which can be found here. The supplement has been made possible by the Mail & Guardian’s advertisers and the content has been signed off by 27four or the advertiser.