‍Portfolio Performance

Despite the extremely difficult operating environment, our affiliate portfolio remained resilient. The diversified nature of our portfolio and the asset classes under management, together with good growth in AUM and strong performance in fee earnings, resulted in a better-than-expected financial performance. AUM increased 24% (up R32.9 billion) to R168 billion in 2021, reflecting the strong bull market in South African equities (up 25%), global equities (up 16%) and South African bonds (up 14%). The total net inflows across our portfolio amounted to R5 billion for the period. The R5.8 billion invested into retail portfolios resulted in a 37% increase in total retail AUM. Alternative strategies (hedge funds and private equity) increased by 38% with R35 billion under management.

Our business, now in its sixth year of partnering with a select group of independent South African boutique asset management firms, is largely in a consolidation phase. Our efforts have mainly been focused on optimising our existing portfolio through strong, supportive, non-interfering partnerships with our affiliate managers. During the year under review, this included expanding our asset class reach by supporting the expansion of new products, which enabled the overall breadth of our affiliate stable to mature in a healthy organic manner.

In December 2020, we reached an agreement to dispose of our 30% interest in Tantalum Capital to Laurium Capital. However, we continue to hold an economic interest in the merged entity through an agreed 24-month agterskot mechanism.

RMI Investment Managers and our shareholders recognise the importance of empowerment and playing a meaningful and active role in transforming the asset management industry in South Africa, through partnering and growing the next generation of significant investment management businesses. An agreement was reached during the period under review with Royal Bafokeng Holdings to extend our empowerment partnership to a wider group of affiliates. We believe that this transaction will provide an important growth catalyst to our affiliates and assist them in becoming leading players in the South African asset management industry.

Royal Investment Managers our joint venture with Royal Bafokeng Holdings, performed marginally below expectations, largely due to the difficult year where the impact of Covid-19 affected some businesses more than others. During the period under review, Royal Investment Managers finalised terms with Balondolozi Investment Services to convert its 30% equity stake acquired in December 2017 into a quasi-debt instrument on favourable terms.

Future Outlook

While we believe our portfolio composition to be largely complete and balanced, we remain opportunistic as it might relate to refining or expanding our portfolio to further enhance our overall positioning across the asset management value chain.

Our team is focused on entrenching our value-add model to accelerate scale, profitability, AUM growth and relevance of our affiliates.

We will ensure that our reputation as a trusted, value-adding but non-interfering shareholder of choice for the independent asset management industry remains a core philosophy.

Our team and partners in Momentum Metropolitan and Royal Bafokeng Holdings remain excited and committed to working with our affiliates to support their growth in the coming years.

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