anchor group ltd vunani small cap conferenceanchor group ltd vunani small cap conference march 2015....

Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834

Anchor Group Ltd

Vunani Small Cap conference

March 2015


What is Anchor Group?

Primarily Anchor Capital• SA’s“fastestgrowing”assetmanager,withR11bnofassets

Minority stakes in other asset management ventures• Differentfocusorgeography;theyleverageoffACstructure

› CartesianCapital(19.9%)–black-ownedinstitutionalassetmanager

› AnchorSecurities(25%)–privateclientstockbrokingbusiness

Ripple Effect 4• Thebusinessoffinancialservicesknowledge,providingeducationandonlineresearchservices

Offices in Sandton, Durban, Irene, Cape Town• 48degreedstaffacrossgroup(7CA(SA)’s,12CFA’s/CFAcandidates)

› 38inAnchorCapital

› 9inAnchorSecurities


The Listing


The share - facts and figures• ListedatR2on16Sept2014(R60mraised)

• Issued40.3msharesatR6.20(R250mraised)on6Dec2014

• Sharesaty/e=140m

• 28millionshareshavetradedsincelisting(5mpermonth)

• ForecastadjustedHEPSfor2014=29-31c

• Navpershare=250c(>R300mcash)


Our ducks are in a row

• Listedcompany

• World-classinvestmentteam

• Globalinvestmentprocess

• 3-yeartrackrecord

• Topperformance

• Attractingindustryleaders

• Fundsgainingcriticalmass

No.1General

Equity Fund*

in South Africa

As measured by Funds Data

Source:FundsDataOnline12 months to 31 Dec 2014

* Past performance is no indication of future results and an investment in equities involves capital risk. Investors should consider the suitability of an investment relative to their risk profile and financial situation.Anchor Capital is an authorised Financial Services Provider. FSB # 39834


• R11bnatendFeb2015

2013 2014 Feb 2015AUM 2.8 7.3 9.7Advice 1.3 1.3Total assets 2.8 8.6 11.0

Our growth• GrownAUMby160%in2014fromR2.8bntoR7.3bn

• Grownfromnumber150to+/-number25assetmanagerinSAin3years

• Consistentlyadding+/-R300mpm/R3.6bnperyearforlast8quarters

• Pipelineindicatesthatthiscanbesustained


Grown from number 150 to +/- number 25 asset managerin SA in 3 years (0.1%marketshare,Coronationis120xbigger)

Objective: Big Player category in 3 years› Note:Thisanalysisincludesallassetmanagerswhorunpublicunittrusts.Perfectinformationisnotavailableforallofthebelowandisbasedonestimatesandindustryknowledge;certainplayersmightnotbecorrectlyallocatedbelow.

1 Absa 1 Fairtree 1 36One 1 Aylett2 Allan Gray 2 Kagiso 2 Afena 2 Bateleur3 Ashburton/FNB 3 Melville Douglas 3 Grindrod 3 Noble4 Coronation 4 Oasis 4 Mazi Capital 4 Cannon5 Discovery 5 Plexus 5 Cadiz 5 ClucasGray 6 Investec 6 Prescient 6 Sasfin 6 Community Growth 7 Momentum 7 Prudential 7 Sesfikile 7 First Avenue 8 Nedgroup 8 PSG 8 Verso 8 Imara9 Old Mutual 9 RE:CM 9 Peregrine 9 Harvard House

10 Sanlam 10 Citadel 10 Anchor 10 Laurium 11 Stanlib 11 Visio 11 Kruger

12 MitonOptimal 13 Rezco14 Rootstock 15 Truffle

The giants (R100bn+) (11)

Big players (R30bn-R100bn) (11)

Mid-sized (R5bn-R30bn) (8)

The challengers (R2bn-R5bn) (16)

The SA asset management universe


We take investment very seriously• Weinvestigateeveryopportunitythoroughlyandhaveaverybiginvestmentteamforoursize

Culture• Weownthebusinessandhavehadimmensedrivetosecureanddeliverforclients

Trust• Wehaveearnedthetrustofclientsandagreatdealofourbusinesshascomefromreferrals

Making clients money• Wehaveperformedwellandaddedtomarketperformancethroughinnovativemoney-makingideas(eg.AttacqandBEEschemes)

Why have we achieved success so far?


Extremely active marketing• Bigfocusoncoldcalls,TV,radio,internetandbiggestsuccesshasbeendailynewsletter,with6,000recipients.Weputoutregularhighqualityresearch

Tick all the boxes• Wegotthestoryright:Rightshareholders,investmentteam,product,pedigreeetc.

• Willingnessofmarkettosupportnewplayer

• Marketfatiguewithvanillaofferingsofbigexistingplayers

• Nimble-appropriaterangeofproduct

• Wehavegrowntheproductrangeinresponsetowhereweseemarketdemand

Further reasons for success


Phase Natureofphase Indicativeassetsundermanagement

IObtainlicensing,buildinvestmentteam,attractinitialprivateclientassets

<R1bn(usually2years)

IIBuildprivateclientcriticalmassassets,buildoutteam,startunittrusts,initialcorporateandIFAsupport

R1bn–R4bn(years3-4)

IIIStarttogetmeaningfulIFAsupportandunitisedbusinessgrows

R4bn-R10bn(need3yeartrackrecord)

IVGettakenseriouslybyinstitutionalmarket,riskconsultantsandmulti-managers

R10bn-R20bn

V Becomeabigplayer R20bn-R100bn

“We are well into Phase III”

Stages in the life cycle of AM company


The basic modelAssets (R'm) 4,000 6,000 8,000 10,000 15,000

Yield 1.20% 1.15% 1.10% 1.05% 1.00%TO 48 69 88 105 150Margin 40.0% 42.0% 45.0% 47.5% 50.0%Op profit 19.2 28.98 39.6 49.875 75PAT 15.7 23.8 32.5 40.9 61.5

Turnover 100Fixed costs 30Margin 70Incentives 21Profit margin 49

• Businesshasbuilt-in“inflation”of15%perannum,onaverage

• Allprofitsincash,virtuallynoworkingcapital

• Simplebusiness

› 5invoicespermonth,paidwithin15days

› Expenses80%rentandstaff

• Around70%Randhedge

• Verylittlefixedinvestmentrequired

• Fixedcostsnowinplace

› Somestep-upwithgrowth,butinprincipleonlysalesandPMcosts(directrevenuedrivers)willbeadded

• Businessmodelhas50%operatingmargin,alreadyat>35%

• Largelyannuityearnings,+/-15%ofassetshaveperformancefees

• Sticky,diversifiedbasewhichwillberesilienttomarketfluctuations

Attractions of business and model


“We have gained the trust of SA’s elite”

• DominatedbyUltraHighNetWorthclients

› 1200clientsaltogether

› NumerouslistedcompanyCEOsanddirectors

› Biggest>R500m,averageR8m

› +/-50clientsinR20m-R250mrange

› Bigclientsreceivehigh-touchservice,smallerclientsinvestedinunittrusts

• R2.4bninunittrusts

• +/-R1bnoffshorein+/-100accounts

• DoingbusinesswiththebigSAadvisors

• Corporate/Institutional:Various,includingtop40companies

Current client base


Anchor Group Ltd

Anchor Securities (Pty) Ltd

Anchor Capital Cape Town (Pty)

Ltd

Cartesian Capital (Pty) Ltd

Anchor Capital (Pty) Ltd

Ripple Effect 4 (Pty) Ltd

Anchor Financial Services

100%

25%

50%

* EFFECTIVE INTEREST

*

19.9%

65%

100%

Anchor Group structure


Person Age Years exp.

Qualifica5on Role / 5tle Special skills

Peter Armitage 46 22 CA (SA) CEO of Anchor Group and Capital

Market experience

Anthea Gardner 43 12 B Soc Sci, MBA CEO, Cartesian Capital MulF-‐skilled, fixed income

MaIhew Norwood-‐Young 31 11 B Comm

Head: MarkeFng Best fetcher in the market

Sean Ashton 33 12 B Comm (Hons), CFA Chief Investment Officer Among the best investment minds

Todd Kaplan 41 14 BSC (Hons) Chief of OperaFons The most efficient around

Darryl Hannington 31 10 B Comm (Hons), CFA Head: PorYolio management Great client service

Glen Baker 50 26 B Comm (Hons) Head: AlternaFve Investments

AlternaFve markets

Lee Cairns 41 12 BA (Econ), CFP Head: Wealth management Can operate at highest level

Fransoa Swart 38 15 BA, MBA Candidate Head: Trading Great reliable trader

David Gibb 48 20 CA (SA), CFA Fund manager Deep thinker, ran Stanlib’s equity investment team

Neil Brown 45 22 Actuarial Exec – AFS Former CEO of Citadel Wealth

Dale Franklin 37 15 B Comm (Investment Management) Exec – AFS Former CEO of Sasfin Wealth

Ferdi Schenck 41 15 B Comm LLB Exec -‐ AFS Former Head of Compliance and Risk at Allan Gray

David Rosevear 58 35 CA (SA) Head of Corporate Finance One of the most experienced in corporate South Africa

Key people


MikeTeke – Chairman

PeterArmitage – CIOInvestecWealth

DavidRosevear – DirectorBidvest

MatthewN-Young – Sales,Investec

SeanAshton – SeniorPortfolioManagerInvestec

GlenBaker – SeniorPortfolioManagerRMB

PeterLittle – SeniorPortfolioManagerCreditSuisse

DavidGibb – HeadofEquities,Stanlib

DaleFranklin – MDSasfinAssetManagement

FerdiSchenck – Co-founderSygnia,AllanGrayops

NeilBrown – CEOCitadel

Key individuals - experience


Investment performance and product• Worldclassglobalteam–15analysts

• 5unittrusts

• Segregatedportfolios

Distribution• +/-30clientfacingstaff/assetgatherersbyyearend

• AnchorFinancialServices

• Maintainprofile

Governance, risk, compliance• InourDNA

• Rightpeople

Getting the future right


• Localandglobal,acrossassetclasses,20contributors

• Investmentviewsformed,consumedbyinvestmentcommunityindifferentforms

“leveraging off the investment process”

The investment process

Localmodelportfolios

Formsbaseofsegregatedportfolios,PortfolioManagerstailortoindividuals

Unitisedproducts

Portfolioscreatedforunittrustsandinstitutionalmandates,usingbaseofideasfrominvestmentprocess

Globalmodelportfolios

Formsbaseofsegregatedportfolios,PortfolioManagerstailortoindividuals

Hedgefunds

Investmentideasimplemented(longandshort)inhedgefundproducts

Newideas

Ideasgeneratedinprocessdevelopedintonewmoneymakingstructures

How the business is built …


Unit trusts Segregated por0olios

Hedge funds Offshore Special opportuni8es

Equity Peregrine account

Long/Short Segregated (equity / balanced)

BEE

SA Equity RMB Note Property Global Equity Fund

Discounted placings

Managed/ Balanced

Personalised unit trusts

Personal hedge funds

Absolute Macro Fund

Various other

Flexible / Income

Mining rehab

Property

R2.4bn R6.5bn R550m R1bn R500m

Products


Equity Performance

No.1General

Equity Fund*

in South Africa

As measured by Funds Data

Source:FundsDataOnline12 months to 31 Dec 2014

* Past performance is no indication of future results and an investment in equities involves capital risk. Investors should consider the suitability of an investment relative to their risk profile and financial situation.Anchor Capital is an authorised Financial Services Provider. FSB # 39834

3% 11%

23% 31%

70%

34%

2% 7% 8%

21%

51%

25%

3% 6% 5,5%

15%

40%

20%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

70,0%

80,0%

1-‐month 3-‐month 6-‐month 12-‐month Since incep8on Since incep8on (annualised)

Fund Benchmark Peers

Fund Benchmark Peer Group1-month 3,2% 2,6% 3,3%3-month 11,1% 7,0% 5,8%6-month 22,6% 8,0% 5,5%

12-month 30,6% 21,3% 15,4%Since inception 69,8% 51,1% 39,5%

Since inception (annualised) 33,5% 25,3% 19,9%


Eachdotrepresentsoneof180GeneralEquityFunds

2014 Equity Fund performances

Anchor +25%

Mean +11%


• Wefirmlybelievethattogrowanassetmanagementcompany,youneedequalfocusoninvestmentandmarketing

• Wetakeanaggressive,directapproachtomarketingandsales

• Therearenumerousqualifiedcoldcallsfromourbusinesseveryday

• Wealsocreateproductsandideastosell

› Miningrehabilitationfunds

› BEEscheme

› Section42transfers

› Gearingonshares

› Specialopportunities(Eg.Attacq,Advtech)

› Personalhedgefundsandunittrusts(notpublic)

› Moretocome

Distribution


Direct cold calls• Thebestinthebusiness

Media / mouthpiece• WehaveourownTVshowonCNBC:“TalkingStocks”

• Weareregularlyfeaturedandquotedinnewspapers/internetsites

Research / newsletters• Adeliberatestrategytobuilddatabase

• Morningnewsletter–senttoover5,000peopledaily

• Advisor.co.za–senttoover1,200IFA’sweekly

• Wedistributeresearchwhichgetscoverageinmanyplaces

Social media• EffectiveandextensiveuseofTwitterandFacebook

Selective adspend / marketing partnerships:• Billboards,golfcarts/courses,events

Listing• Hadaphenomenalimpactonprofile,newclientscall-insetc.

• Over2,300shareholders(350atlistinginSept2014)

Direct relationship marketing• Weeklybreakfasts,parties,eventsetc.

The way we market


Man in the street

HNW Clients IFA’s Ins4tu4onal

Product Unit trusts / New IT venture

Bespoke por4olios and wealth management

Unit trusts and segregated

Segregated / unit trusts

Approach Not the focus at the moment, but default business streaming in. Building business brand.

1)  Sales team approaches and hands over

2)  Individual wealth managers join with assets

Brand building, advisor.co.za, direct contact, roadshows, videos etc.

Direct pitches to companies and trustees. Approach covered in separate presentaHon

Team Desk service if required

1)  5+3 sales 2)  5+13 wealth

managers

AFS team and dedicated sales person

3

Markets and approach/strategy


• Teamin6monthstimeshouldaimfor+/-R400minassetspermonth=R4.8bnperannum(excludesmarketgrowth)

• Thisiscurrentlybeingexceeded

• Institutionalthebigswingfactor

Sales Por*olio managers who bring in assets

IFA’s Ins7tu7onal “Call-‐ins”

Current: 5 Current: 6 Current: 4 n/a

Total in 6 months: 8



n/a

Per person per month: R10m R10m Team:

R100m

Total per month: R80m R120m R65m R100m R20m

Asset gathering calculation

= 15

= 24


(assume midrange of trading update)

• Dividedby+/-140mshares

• Excludesnewideasandacquisitions

• Majorriskismarketperformance

• R11bnatendFeb2015

• FunctionofAUMandyield

• R300mcapital

• 5%=R15m

• 10%=R30m

• 15%=R45m

• Dependsontimingofacquisitions

Earnings equation

2013 2014 2015

Starting AUM 0.9 2.9 8.6Ending AUM 2.9 8.6 ?Avg AUM 1.9 5.7 ?

R'm R'm R'm"Core business" 5 21Earnings on K 0 1

5 22 ?

R’bn


Thank you

anchor group ltd vunani small cap conferenceanchor group ltd vunani small cap conference march 2015....

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