Insatiable appetite for capital
The Economist this week spoke to the Chief Executive Officer of Sanlam Investment Management, Mr Tega Shiimi ya Shiimi about his involvement in the development of the local capital market.
“From a capital market development perspective, we at SIM have managed to increase our assets under management from about N$7 billion of discretionary savings and now we are just under the N$22 billion mark, and this was over the last decade,” said Shiimi ya Shiimi.
In essence local commercial banks may find it difficult to provide loans that match the long term nature of infrastructure projects and SIM has been at the helm of developing capital market.
He said, “We have always been big proponents of speaking to the treasury and government to issue more paper and bonds since we are managing longer term assets and have a need to match a larger client annuity book.”
Sanlam’s insatiable appetite to develop the capital market has encouraged them to engage with the treasury and government to seek government paper to match their annuity book since government paper is fully secured.
With different programmes in the pipe line, SIM is working hard and is hopeful to create a sustainable secondary market in the capital market.
“We had a specific programme as well with one of our larger clients who wanted a specific mandate for us to create an inflation linked bond market with specific focus on funding sound parastatals, to see whether we can not issue some debt instruments in the inflation linked side, so that at least the matching would not just be a bond but also linked to inflation so as to cushion the return,” explained Shiimi ya Shiimi.
His involvement in the local market has positioned the investment management firm as a strong supporter of Initial Public Afferings (IPO’s) and other companies on the stock exchange. “In our history we have supported quite aggressively all the local listings over the last 10 odd years that I have been around,” he said.
Again, more recently, Shiimi ya Shiimi pointed out that there has been a show of market confidence as they were a strong institutional participant in Bank Windhoek Holding successful listing.
“Bank Windhoek listed in June last year at 8.75 and is now trading at 10.80. We took up a big chunk on behalf of our policy holders and other clients. In the end they made a good 23% return in just less than a year on the Bank Windhoek Holding Listings,”he said.
Citing challenges in the development trajectory, he said, “There are a lot of companies specifically in the mining sector listing on the development exchange, but unfortunately the nature of the money we are custodian of (largely pension, retirement and life fund assets), by virtue of that mandate may not invest in exploratory companies, as the risks and viability of such ventures are at times not determined.
According to Shiimi ya Shiimi, SIM does not want to invest in speculative stocks as their mandate is to safe guard investors’ money. He said that companies on the main board of the NSX in general are increasing in value but are not trading actively, which is a bit of a concern from a liquidity perspective. But this is a common theme with developing exchanges, he said. Meanwhile, he spends a lot of time sitting on various industry and advisory bodies for the financial sector. “More specifically we have spent a lot of time with Namfisa on the regulatory changes they want to bring on the market. One of the hot topics being the changes in regulations 15, 28 and 29 around listed and unlisted investments.” He stressed that they have made great strides in the development of the capital market since a large part of the financial sector had been South African based business. Supporting the development of a mature local capital markets can help address these constraints, a focus he is passionate about.