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What is Anchor Group?
Primarily Anchor Capital•SA’s“fastestgrowing”assetmanager,with>R11bnofassets
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•50degreedstaffacrossgroup(7CA(SA)’s,12CFA’s/CFAcandidates)
› 38inAnchorCapital› 9inAnchorSecurities
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
The Listing
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
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Day 1 Sep-‐14
Oct-‐14
Nov-‐14
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Jan-‐15
Feb-‐15
13-‐Mar-‐15
ACG share price
The share - facts and figures
•ListedatR2on16Sept2014(R60mraised)
•Issued40.3msharesatR6.20(R250mraised)on6Dec2014
•Sharesaty/e=140m•28millionshareshavetradedsincelisting(5mpermonth)
•AdjustedHEPSfor2014=30.1c
•Navpershare=252c(>R300mcash)
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
2014 2013
R’m R’m % ch
Revenue 82,4 31,6 161%
Costs 53,8 24,5 120%
Opprofit 28,6 7,1 302%
Comprehensiveincome 24,3 4,8 407%
Headlineearnings 21,5 3,8 471%
Adjustedheadlineearnings 22,8 3,8 509%
Opmargin 34,7% 22,6% 54%
AverageAUM(R’bn) 5,1 2,1 143%
Yieldonavgassets 1,6% 1,5%
Earningspershare(cents) 32,0 7,5 326%
Headlineearningspershare(cents) 28,3 7,5 276%
Adjustedheadlineearningspershare(cents) 30,1 7,5 301%
Dilutedadjustedheadlineearningspershare(cents) 29,2 7,5 288%
Income statement
2014 2013
R'm R'm
Non current assets 44,1 4,9
-Goodwillandintangibles 31,0 3,6
-Investmentinassociates 9,9 0,0
-Other 3,2 1,3
Current assets 333,6 16,7
-Otherfinancialassets 8,6 3,3
-Tradeandotherreceivables 21,9 6,3
-Cashandcashequivalents 303,1 7,0
Assets 377,7 21,6
Shareholders equity 353,1 8,0
Liabilities 24,6 13,5
-Deferredtax 0,8 0,0
-Otherfinancialliabilities 4,0 6,5
-Currenttaxpayable 1,7 1,4
-Tradeandotherpayables 18,1 5,7
Equity and liabilities 377,7 21,6
Net asset value per share 2,52 0,16
Balance sheet
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
2 4,2 11
21
28
54
-‐2
1 1 3 9 14
-‐10
0
10
20
30
40
50
60
1H2012 2H2012 1H2013 2H2013 1H2014 2H2014
Income statement progression (R'm)
Revenue Adjusted headline earnings
Earnings by six month periods
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
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Our growth
•GrownAUMby160%in2014fromR2.8bntoR7.3bn
•Grownfromnumber150to+/-number25assetmanagerinSAin3years
•Consistentlyadding+/-R300mpm/R3.6bnperyearforlast8quarters
•Pipelineindicatesthatthiscanbesustained
•>R11bnatendFeb2015
2013 2014 Feb 2015AUM 2.8 7.3 9.7Advice 1.3 1.3Total assets 2.8 8.6 11.0
The SA asset management universe
Grown from number 150 to +/- number 25 asset manager in 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)
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Why have we achieved success so far?
We take investment very seriously•Weinvestigateeveryopportunitythoroughlyandhaveaverybiginvestmentteamforoursize
Culture•Weownthebusinessandhavehadimmensedrivetosecureanddeliverforclients
Trust•Wehaveearnedthetrustofclientsandagreatdealofourbusinesshascomefromreferrals
Making clients money•Wehaveperformedwellandaddedtomarketperformancethroughinnovativemoney-makingideas(eg.AttacqandBEEschemes)
Further reasons for success
Extremely active marketing
• Bigfocusoncoldcalls,TV,radio,internetandbiggestsuccesshasbeendailynewsletter,with6,000recipients.Weputoutregularhighqualityresearch
Tick all the boxes
• Wegotthestoryright:Rightshareholders,investmentteam,product,pedigreeetc.
• Willingnessofmarkettosupportnewplayer
• Marketfatiguewithvanillaofferingsofbigexistingplayers
• Nimble-appropriaterangeofproduct
• Wehavegrowntheproductrangeinresponsetowhereweseemarketdemand
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Stages in the life cycle of AM company
“We are well into Phase III”
Phase Natureofphase Indicativeassetsundermanagement
I Obtainlicensing,buildinvestmentteam,attractinitialprivateclientassets <R1bn(usually2years)
IIBuildprivateclientcriticalmassassets,buildoutteam,startunittrusts,initialcorporateandIFAsupport
R1bn–R4bn(years3-4)
III StarttogetmeaningfulIFAsupportandunitisedbusinessgrows
R4bn-R10bn(need3yeartrackrecord)
IV Gettakenseriouslybyinstitutionalmarket,riskconsultantsandmulti-managers
R10bn-R20bn
V Becomeabigplayer R20bn-R100bn
Attractions of business and model
• Businesshasbuilt-in“inflation”of15%perannum(marketincrease),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
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
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Current client base
“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
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 (Hons) 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) CFO, Head of Corporate Finance
One of the most experienced in corporate South Africa
Key people
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Key individuals - experience
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
Getting the future right
Investment performance and product
• Worldclassglobalteam–15analysts
• 5unittrusts
• Segregatedportfolios
Distribution
• +/-30clientfacingstaff/assetgatherersbyyearend
• AnchorFinancialServices
• Maintainprofile
Governance, risk, compliance
• InourDNA
• Rightpeople
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Products
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
Equity Performance
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%
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
(to end February 2015)
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
2014 Equity Fund performances
Eachdotrepresentsoneof180GeneralEquityFunds
Anchor +25%
Mean +11%
Distribution
• Wefirmlybelievethattogrowanassetmanagementcompany,youneedequalfocusoninvestmentandmarketing
• Wetakeanaggressive,directapproachtomarketingandsales
• Therearenumerousqualifiedcoldcallsfromourbusinesseveryday
• Wealsocreateproductsandideastosell
› Miningrehabilitationfunds
› BEEscheme
› Section42transfers
› Gearingonshares
› Specialopportunities(Eg.Attacq,Advtech)
› Personalhedgefundsandunittrusts(notpublic)
› Moretocome
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
The way we market
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• EffectiveandextensiveuseofTwitter
andFacebook
Selective adspend / marketing partnerships:• Billboards,golfcarts/courses,events
Listing• Hadaphenomenalimpactonprofile,
newclientscall-insetc.
• Over2,300shareholders(350atlistinginSept2014)
Direct relationship marketing• Weeklybreakfasts,parties,eventsetc.
Markets and approach/strategy
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
Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834
Asset gathering calculation
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
Total in 6 months: 12
Total in 6 months: 4
n/a
Per person per month: R10m R10m Team:
R100m
Total per month: R80m R120m R65m R100m R20m
= 15
= 24
• Teamin6monthstimeshouldaimfor+/-R400minassetspermonth=R4.8bnperannum(excludesmarketgrowth)
• Thisiscurrentlybeingexceeded
• Institutionalthebigswingfactor
Earnings equation
• R11bnatendFeb2015
• FunctionofAUMandyield
• R300mcapital
• 5%=R15m
• 10%=R30m
• 15%=R45m
• Dependsontimingofacquisitions
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
• Dividedby+/-140mshares
• Excludesnewideasandacquisitions
• Majorriskismarketperformance