ABSIP President - Polo Leteka Radebe chats to Ninety One Founder and CEO Hendrick Du Toit about his mission to make the difference in South Africa and sharing his learning from his experience in financial services industry as well as his views on diversity, inclusion, and social responsibility.
Ninety One is dual listed asset management entity in London and South Africa with the goal of providing long-term investment returns for their clients while making a positive difference to people and the planet across the country.
Hendrik du Toit is the founder and Chief Executive Officer of Ninety-One. He entered the asset management industry in 1988 and joined Investec Group in 1991, founding Investec Asset Management, which rebranded to Ninety-One in 2020. He also served as Joint Chief Executive Officer of Investec Group from 1 October 2018 until the demerger and listing of Ninety One from Investec Group on 16 March 2020.
Polo Leteka Radebe: Before I start the conversation, I want to share with our colleagues as to why it is important for ABSIP to have these series. What we have found is that we have wide range of members within our membership base, we have young people that are entering the work environment and understanding how to navigate. We have people like yourself who are doing very well - very well established and whilst you have achieved a lot and you are probably achieving a lot. We find that there is a huge gap between the guys who are getting in to try and figure things out between yourselves. We all know Ninety One and we all know the name Hendrik du Toit, however not a lot of people know your face Hendrik, I also only met you weeks ago. So we thought we should bring some element of humanity to this big London listed Asset Management firm, a large asset manager on the African continent as well. Welcome and this is our inaugural session, so you are setting the tone.
Hendrik du Toit: May I say something about your idea? Firstly, you have a very good President guys, I would keep her president for life. Polo came down to see me interestingly that is what struck me, that I was privileged in the 80’s as a kid when I came from the university and when I started working in the industry with older guys who spent time with the corporate CEO’s, you go and learn about the business. The ones that ran the good companies, they always make time. The ones who were at the bad companies were too busy and they invest it back for not getting anything back just because they were teaching people or sharing ideas because you learn from young people, they teach us a lot. |
For me, this is a privilege to engage with ABSIP, a very important institution in South Africa however I think this dialogue should be frank and centre because we can come to it later. However, the difference between the 1980s and 1990’s, we confronted our problems and if we do not mind later, we talk a little bit about it. We need to collectively confront our challenges and problems and the only way we can do that is intergenerational conversation or mutual learning.
Polo Leteka Radebe: I am glad you did and I think it was interesting to hear your journey because as Phelisa Ngonyama was talking about your own journey, I was thinking how can we almost cut and paste that into today into the current problem we are trying to solve which is that of financial inclusion, diversity, representativity. The financial services sector says that we are somewhat transformed as the sector ABASA issued a BEE report about this 18 months ago saying that most of the banks were performing exceptionally well. I think we were probably at 1 – 3 as the worst and yet your typical South African still does not feel this transformation that we brag about, and I think as ABSIP we have come to the conclusion that we need to do something fundamentally differently. As I was listening to your story, I was thinking that maybe those are the type of risks that are similar to what you did – the boldness. It sounds like you are quite bold as a young person you did not accept the status quo. How do we take from that and apply it to today because it is the boldness that actually saw the shift and change in the transformation that we are now taking about, and it was brought by Ninety One. How do we do that under racial transformation and gender?
Hendrik du Toit: I just went through the list of Presidents, and I know most of them, grown up business however in those days, we engaged a lot in the events of immediate post 1994 period. We need to start that again with ex-colleagues, clients and those who were never close. The moment you close doors and I don’t want to use the word “stereotype” however stereotyping people. Then you lose the richness and the diversity that particularly the South African business landscape has to give. We have interesting business people operating at incredibly challenging conditions. We should continue the transformation journey because you consistently transform in the world in whatever you do to inclusiveness. You can only be inclusive if you have something to include people into and at the moment, we are screwing up that economy by destroying opportunities and confront the reality we are facing and how we are going to change the reality for the betterment of all and most importantly – the most vulnerable.
What shocks me in this country is that it is how long enough since we valued the ANC government whether we have a white or black government, no one cares about the very poor.If we do not address those challenges we are not going anywhere and the only way to address that conversation is by creating a tax space of successful businesses ran by black and white, Indian and coloured that employ people, we must move on from enrichment to creation of employment, competitive business worldwide, if we do not do that someone else will import the product regardless of tax.
I re-read a speech whereby Nelson Mandela was still in jail and his daughter, late Zindzi in 1985 read the Jabulani Stadium and she basically rejected PW Botha’s offer of renouncing violence in the country. That is very applicable to us today because collectively in South Africa, we are just not dealing with it. Nelson Mandela talked about the political freedom – the exact freedom we want today that is being taken away from us. For instance, the assassination of AKA in that hotel. The freedom to live in peace. Now we have to fight for the freedom to live and prosper in peace as a society and have an orderly non-corrupt society and too few of us are standing up together and calling it out and saying enough. It is not just in the old system that we have to transform, we have to protect the system and create a new system. We are not doing enough.
Polo Leteka Radebe: What should we be doing as business leaders. What can you do as Ninety One being the size and type of business that you are to get us back to that conversation and lead it because it is a conversation that needs to be engaged about?
Hendrik du Toit: In the Ramaphosa Presidency – he does not victimise people who express an opinion. We have open free space to express, we do not have to do what some people are doing in parliament However, we have enough space to express ourselves and therefore we need to have the courage to express ourselves as citizens not as corporate leaders because your job in the company is to run the company for the shareholders and the stakeholders and be valuable for them and in this case as clients we should not be interfering in the political world. As citizens, we should be using the resources that we have to support the national solutions and I would say corporate South Africa must be reorganised. We can not have so much corporate South African representatives of the organisations – there should be one for business. We should also have 1 – 2 Labour federations, we should communicate straightforward.
Polo Leteka Radebe: Can we arrange our own CODESA (Convention for a Democratic South Africa)?
Hendrik du Toit: We should have a CODESA. What you have done with this kind of forum and what you do by having conversations with people from all persuasions and those that we disagree with should be sitting and engaging with them. Because you see our secret sources in the 1980’s, the entire society including the young ones in the room was that in the 1980’s, 95% of South Africans knew that there had to be a change even the soldiers of apartheid government knew there had to be a change and therefore the leaders had to listen, and we need to get that spirit again. I learnt from the first Non-Executive Board Member, he said, “Do not worry, the people will dictate to the leaders” and I think we are heading to a phase where people are dictating. Whether it is virtual or physical space – we should create one. Again, well done to you for creating this platform. We should engage about the real solutions being created which is also across South Africa, in places like Free State, they starting to solve issues by themselves and not relying on the government.
Polo Leteka Radebe: Apart from one bank I am aware of, Is the financial services sector intentional about helping to create black owned businesses of South Africa?
Hendrik du Toit: Financial Services Sector created a major role in the black ownership with transition of ownership. Was that necessarily, correct? In other words, they created more billionaires than millionaires. I am not sure if that was necessarily correct. I was us to go broad-based. I want us to create a South African full of opportunities for either black or white to access those opportunities on merit and capital is freely available for risk taking i.e. for entrepreneurial adventures. We need to get the culture of investment and confidence that needs black leadership not just white minority people and that is transformation.
Polo Leteka Radebe: What would Ninety One do if there are young entrepreneurs in need of capital and if public financial services sector do not come to support them early enough, how can we then support these young entrepreneurs?
Hendrik du Toit: There are a lot of developmental Institutions in this country such as the IDC and small business corporations. We need to take back our land bank for farmers, we need to take back our developmental institutions. When it comes to people like us who work with pension and savings, we are not there to take money – banks do it sometimes because they take clients and make profit through them all the way. When you talk about the Asset Management sector and the Pension Sector, we invest in fairly mature assets that are reasonably on behalf of people who depend on their pension. Ninety One’ s mission is to create as many skilled financial professionals as possible who could go out and build their own private equity businesses and take the risk to drive businesses. However, we are very big and we can not go outside our lane because we will end up costing the pensioners too much. One of our plans currently is financing infrastructure, if there is good infrastructure, we can provide the credit to do that at scale. If we change our core business and try to save the country, we will go bankrupt with the country. I know capital is needed however it is not in our space.
Polo Leteka Radebe: As an Asset Management firm, your areas of contribution are in the building of the pipeline of black business professionals especially women as well?
Hendrik du Toit: Majority are in black women firms. Our role is to price capital appropriately. If South African prices capital professionally, capital will not me misallocated. Government seems to misallocate the capital they have to administrative pricing procedure and have no market pricing procedure and that capital pricing requires good analysis, thoughtful, risk mitigation, long term thinking, and we are one of the few emerging markets probably number two of the China, probably equal.
Polo Leteka Radebe: How does your investments impact the lives of the black South African in the rural areas and the townships?
Hendrik du Toit: If that statement was true, I would be in heaven. The sad thing is the citizens living in deep rural South Africa have been so excluded that they do not even know who Ninety One or Aluwani is. We have not included them, we need to get to a point where those towns and areas are more successful and can be integrated into the financial economy and not going back to the substance economy or the smuggling economy.
If Johannesburg creates more jobs and cash circulates, what we can do is make and help Johannesburg Cape Town work better. We are not in a position to make rural KZN work better, it will work better with cash going back. We need to create a dynamic and modern business environment and guard against corruption. When I talk to my peers in the construction industry, they tell me about the corruption and the gangsters. We need to be thankful that we are operating properly.
Polo Leteka Radebe: How does the pensioner feel that their money being invested in whichever way actually Improves their economic conditions or the conditions of the people that come from the rurals?
Hendrik du Toit: Firstly, we have to pay a generated return which allows the pension to be paid because most pensioners in South Africa; not defined benefit but defined contribution means that the money the pensioner has put in has to be invested professionally. Those pensioners get a real return and we make sure we deliver that. Secondly is it done in a socially principal way that companies behave? Unfortunately, we do not have that however we make sure the companies we invest in at least behave as decent and constructive corporate sector citizens and that is how far we can go. As a company, out of our profits we invest a significant amount of money back into societies whether it is a scholarship programme or training schemes or supporting needs through CSI. The real thing is to get the system to function right.
Polo Leteka Radebe: What do you feel that as Ninety One that you have done really well concerning transformation of inclusion and diversity and what are the areas for improvement and what the plan is?
Hendrik du Toit: There is always a room for improvement and needs to be approached with humility. We smelt the coffee because the client base is changing, and the market is constantly changing. Everywhere in the world when we reflect the society which we serve so when we are in Asia or in greater China, it is Chinese people facing the clients. The power of diversity was learnt fairly early and thanks to leaders who always pushed us to understood the value. It is about creating the space to being yourself as well. If anyone in the business can be themselves, they will be their best selves and will deliver.
Polo Leteka Radebe: Business scorecards has gotten us focussed on the wrong things. What is the end game going to look like?
Hendrik du Toit: There are companies who had very clear economic vision. When last have you heard a leader talking about the economic vision except for the SONA with nice words? How are we going to be the most dynamic financial market? We have a better and strong economy, however we are not selling it to the world and that starts with small things. If I go to a good business and buy shares, while analysing equities, I do not always look at what the CEO tells me or investor relations. I walk to the factory, I look whether it is tidy, did the workers smile, that is part of important financial information. Now, in this country we stopped caring. Why don’t we clean our facilities? We will certainly see our pride come back however we can only see that if there is some vision and some hope and currently, that hope is going to reduce our unemployment. To me that is the most vital agenda we have to address. We will not catch the criminals if all people are unemployed.
Polo Leteka Radebe: What is Ninety One’s position when it comes to gender and do we have enough representation of women in the industry?
Hendrik du Toit: Come and spend time with us. Our longest serving portfolio manager is a woman who was employee number four. Investments is a great place for women as they have institution. All I know is that it always made sense to have gender diversity. We are going to a world where we do not let males be males – we must also let people become comfortable no matter what colour or gender you are and be free to express themselves. If you are comfortable in who you are then the rest will engage. Diversity in its broader context; is also social not just female and male.
Key Takeaways:
- The Financial developmental institutions and the private sectors needs to be intentional when supporting every young entrepreneur to navigate and enhance their business in the economy.
- With financial markets changing constantly, pension funds and asset managers need to stay relevant and invest in industries that give their client financial returns including South Africans in deep rural areas.
- Diversity is not just about black and a white human being but it is also about giving people the freedom to be themselves.