Manager Research

Laurium recently announced that they will be buying 100% of Tantalum Capital. The businesses have signed a memorandum of understanding while they are finalising the share sale agreement. The transaction is fully supported by the current shareholders of Tantalum, including management, senior members of the investment team and RMI, which currently holds 30%. RMI will no longer be a shareholder in the combined business going forward, while the Tantalum team will have the option to acquire shares in Laurium.

The difficult domestic economic environment over the last five years, downward pressure on fees and more concentrated distribution channels have left many fund managers exposed to a reduced asset base and declining profitability, which has put the sustainability of smaller managers to the test. We have seen several consolidations in the industry already and expect more in the coming years as managers try to scale operations and continue to run adequately resourced investment teams and infrastructure.

The transaction will see the four Tantalum directors, Rob Oellermann, Mike Lawrenson, Melanie Stockigt and Simone Blanckenberg, move across to join the Laurium team. Melanie will assume the role of Head of Fixed Income and portfolio manager of the fixed income funds, which she takes over from JP du Plessis. JP joined Laurium from Prescient in 2019 with the objective of building out their fixed income capability. He is leaving the business and will join Methodical Investment Management. Mike will continue in his role as a Resources specialist, while Simone will join Laurium in an operational capacity.

Rob will focus on building out Laurium’s global equity capability. Developing a global capability is becoming increasingly important for local fund managers, given the growth in multi-asset funds and direct offshore investments by South African investors. Laurium’s current offshore approach has been to implement their macro views via passive building blocks, which we have always found to be at odds with the active fundamental research process they follow for local assets. Rob has offshore experience from his days at Coronation and was involved with developing Tantalum’s offshore capability. Resourcing a dedicated offshore team and providing more focus is a step in the right direction but will still take a while to mature.

There isn’t 100% overlap between their investment philosophies and significant changes like this take time to settle, but this seems like a sensible combination of investment experience and bodes well for the development of Laurium’s overall capability. We will be spending more time with the Laurium team in the new year, once all of the details around the transaction have been finalised.

We have removed the ratings on the Tantalum funds and kept the ratings on the Laurium funds unchanged.

Summary of Laurium Capital Ratings