Momentum Metropolitan has reached agreement with OUTsurance Group (previously Rand Merchant Investment Holdings – RMIH), to acquire RMIH’s share in the RMI Investment Managers Group (IMG), a deal that will increase Momentum’s asset management market participation significantly.
The value of the deal was not disclosed.
Momentum, which is today expected to report financial results for the 12 months to June 30, has been a minority shareholder in IMG alongside RMIH since 2015, when the multi-affiliate investment management model was launched.
The transaction increases Momentum’s minority stake in a range of independent, owner-managed investment businesses “with good growth potential”, a statement said yesterday.
Momentum’s directors have forecast normalised headline earnings per share to increase between 15% to 22% for the year from 287.2 cents per share the previous year, when it releases its results today.
Jeanette Marais, the CEO of Momentum said with regard to the transaction with RMIH, that “when RMIH offered us the opportunity to increase our ownership in IMG, it aligned perfectly with our existing goal to expand our access to a differentiated sector of the investment industry.”
She said the over the past eight years their focus had been on the affiliate strategy, which involved identifying the best boutique investment talent in South Africa and investing in their businesses without interfering.
“We aim to offer strategic guidance and a distribution network to help them achieve sustainable growth. However, we understand the importance of their independence and value their entrepreneurial identities,” said Marais in a statement yesterday.
The acquisition was a strategic move to complement Momentum’s existing in-house businesses, she said.
It would not only give the group a minority stake in multiple independent, owner-managed boutiques, but the deal also supported transformation and new entrants in the market.
Marais said she was confident Momentum’s entry into market segments where they previously had not been competitive, was a big step towards earnings diversification and access to a broader range of investment styles.
“This deal will be crucial for our growth and success, and we are confident in its positive impact on our business”.
IMG’s management team would continue with their active affiliate engagement model post the transaction.
IMG CEO Alida de Swardt said her team was enthusiastic about the deal and its potential impact on the future of the business.
“As Momentum Metropolitan has already been a shareholder in IMG for 8 years, we are comfortable they understand and endorse our strategic purpose and ambition of building the next generation of independent investment management businesses in South Africa. They are familiar with our entrepreneurial partnership approach whereby we act as a supportive, non-interfering, long-term shareholder that understands the importance of independence”.
She said IMG believed the increased alignment with Momentum would assist its next growth phase.
BUSINESS REPORT