South Africa’s Second-Largest Asset Manager Eyes East Africa for Growth

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(Bloomberg) — South Africa’s second-biggest asset manager plans to grow its market share in East Africa to take advantage of the continent’s fastest growing region. 

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Stanlib Asset Management Pty Ltd. intends to scale up its Kenya and Uganda units, started in the past two years, to become “real competitors,” said Chief Executive Officer Derrick Msibi in an interview. 

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“In Kenya if you don’t get into the top six asset managers, you are going to struggle,” said Msibi, who also oversees the asset management businesses of Stanlib’s parent, Standard Bank Group Ltd. in several African nations including Nigeria and Ghana. “We are very patient, and our view is that it is going to take us three years to get there.”

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The Kenyan unit, started in July, is currently in about 13th position, Msibi said.

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The East African nation’s top six fund managers control 97% of the market and had almost 1.7 trillion shillings ($13 billion) in assets under management at the end December, according to data from the country’s pension regulator. 

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The African Development Bank estimates East Africa will grow 5.3% this year, compared with 4.6% for West Africa, 3.9% for Central and North Africa, and 3% for southern Africa.  

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The expansion will help Stanlib diversify its income streams at a time when asset managers’ margins are being squeezed in South Africa because of rising costs, an oversaturated market and stagnant economic growth.

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“Our view is that, at the moment, we are very much focused on the businesses that we’ve launched,” Msibi said. “Let’s get them” to be among “the entities that dominate the markets they’re in. And we think it’s doable.” 

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Stanlib’s push into East Africa aligns with Standard Bank, as it seeks to ward off intensifying competition and tap African companies growing in the region. 

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The continent’s largest lender by market value, FirstRand Ltd., is looking at establishing itself in the east, including in Kenya, and Nedbank Group Ltd. plans to set up an investment banking product that will allow it tap into the region’s renewable energy, and infrastructure finance needs. 

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—With assistance from Ntando Thukwana, Zinhle Xaba and Katlego Mtshali.

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