Manager Research

Grindrod Asset Management (GAM) recently revealed several changes to their business in an attempt to separate the asset management business from the logistics and transport business. The idea is to allow the asset management business the opportunity to grow and develop into its own. The business will undergo changes to its ownership structure, including the addition of a new shareholder, and a new standalone brand. The shareholder changes have not been initiated, but the brand was changed effective 17 of January 2017.

The ownership change entails JSE-listed parent Grindrod Ltd exchanging all its GAM shares for shares in the new shareholder, Infinitus Holdings (Pty) Ltd. Infinitus is a private equity investment holding company with investments in a wide range of companies spanning the consumer, industrial and financial services sectors. Grindrod will not be divesting, instead they will retain a holding in GAM through their shares in Infinitus, of which they already own 26% (this will increase to 49% post the exchange). GAM will be 76% owned by Infinitus, and 24% owned by management and staff as a means to align interests.

Furthermore, the business is now called Bridge Fund Managers and the names on all their unit trusts will change to reflect the new brand. There will be no change to the way the funds are managed or to the investment team.

Overall, we see these changes as significant, but not necessarily material. The separation of the asset management and logistics businesses makes sense, and Grindrod will still have an indirect shareholding through Infinitus. The 24% management and staff shareholding is encouraging. Our only concern would be that private equity managers sometimes show impatience with the long-term commitment required to run an asset management business. We will also monitor whether there are any business changes, in addition to investment process changes, once the deal has been completed.