Ten years ago Sanlam Private Investments (SPI) was a start-up company with six staff members, 250 clients and annualised turnover of R1m. Today the company turns over R200m/year. Its assets under management have rocketed to R40bn from R134m. And its client base has increased to 12 800. It is the country's second-largest private wealth manager, with ambitions of becoming number one. And the past 10 years have been interesting, to say the least.
It was formed in 1999, as Sanlam's evolution from a traditional life insurance firm into a modern, diversified one-stop financial services group was gaining momentum. However, it lacked critical mass in an environment where size counts.
Luckily the start of the 21st century was a good time to expand. Many of the foreign banks that had invested in SA post-1994 hadn't understood the local market and were struggling to make a profit. Buying opportunities presented themselves and SPI was hungry.
First it acquired Dutch bank ABN Amro's R3bn private client business. Then, a year later it acquired Merrill Lynch's private client business. This gave SPI a national footprint and overnight it became one of SA's biggest private client investment managers.
In 2005, Daniël Kriel, who at the time was head of marketing for Sanlam Investments, was appointed CEO of SPI. He brought energy, enthusiasm and a vision to take the company to the next level. "We had a fantastic team of people in place," he says.
"But the country was changing, the needs of our clients were changing, and we needed to move with the times."
The first task, he says, was to transform what was essentially a stockbroking firm into a private client investment manager. Stockbrokers, he says, are more trading orientated and it is their objective to maximise profitability on a given day. Private client investment managers are a different breed. "They take a longer-term view on the management of their client portfolios and manage these according to predetermined risk profiles," he says.
His most important role, he says, is to ensure the company has the right people working for it, and to create a working environment in which they can thrive. " Portfolio managers are directly accountable to their clients. This is very different to a unit trust portfolio manager who has very little, if any, direct client contact."
Alwyn van der Merwe, who was appointed SPI director of investments about two and a half years ago, became Kriel's wingman in this regard. They both have an institutional background, which means they have an understanding of and appreciation for well structured investment processes. "This translates into better quality investment decisions. But in doing so," Kriel says, "we did not want to dampen the passion, enthusiasm and flair of our portfolio managers."
The efforts to transform SPI were supported by broader changes taking place in the parent organisation.
Former World Bank co-ordinator and University of Pretoria vice-chancellor and principal Johan van Zyl was made CEO of Sanlam in 2003. It was the start of a new era at the 90 -year-old institution. He restructured the business and improved operational focus. "He made us proud to work for Sanlam again."
Of course, great leaders never work alone and Kriel acknowledges the role played by Johan van der Merwe, chairman of SPI and CEO of Sanlam Investments. "He gave us the space and autonomy we needed to change, support for expansion and played a leading role in establishing value-driven businesses within the investment cluster."
By 2005 SA had been part of a rapidly globalising world for just more than 10 years. The investment needs of SA investors were more sophisticated, with investors increasingly looking for offshore opportunities and a global spread of risk.
SPI began to globalise its offering. In 2006 it formed a partnership with Pictet, one of Switzerland's largest private banks, which manages assets in excess of US$260bn. In 2008 Sanlam Investments entered into a joint venture with SMC, India's fourth-largest securities broking house. The JV created two businesses - a wealth management company and an asset management company - which embraces the same business principles as its SA counterparts.
Last year SPI acquired a majority interest in Principal Investment Holdings, a UK-based private client investment business. "We can buy Coca-Cola shares in New York and Bharti shares in Delhi. We can offer clients private banking facilities in Switzerland or expose them to property in London," says Kriel. In an age where everything can be commoditised, a comprehensive offering is important.
WHAT IT MEANS
 Annual turnover stands at R200m
Managing assets valued at R40bn
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To counter a rising threat from the big banks, which were expanding into private client wealth management, SPI launched some innovative products and services. First off it introduced a credit offering, which was backed against the security of a client's share portfolio. The company also dived into the electronic trading market with its platform iTrade. This is a highly competitive market in SA with just 25 000 individuals trading shares electronically. Three years on, it is breaking even and will make a profit next year.
From January, SPI's top clients will receive monthly attribution analysis on their portfolios. At a glance a client will see what they gained (or lost) from each and every decision made on their behalf. The next step is to provide this information online, in real time.
There are plans afoot to broaden this portfolio of products and services further. The next leg of SPI's transformation is about to begin. "We will take SPI from an investment management firm to a fully fledged wealth management firm."
