Investec Plc · LSE:INVP
Investec — Investec Asset Management (Ninety One) — Investor Day (December 2019)
47 slides from Investec's investor day presentation, Dec 3, 2019
Slide 1: Investec Asset Management (becoming Ninety One) Capital Markets Day
Investec Asset Management (becoming Ninety One) Global asset manager with an emerging market heritage Capital Markets Day 3 December, 2019
Slide 2: Clarity of purpose in a changing world
Clarity of purpose in a changing world • Today we’re discussing a significant step in the evolution of the Investec Group • In a world of change, simplicity and focus are key success factors • We’re evolving our ownership structure and changing our name, but not who we are • Our purpose remains the
Slide 3: Today's presenters
Today’s presenters Hendrik du Toit Kim McFarland Founder, IAM and Finance Director, IAM and Joint CEO, Investec Group Executive Director, Investec Group Background Background • Founded IAM in 1991 • Joined IAM in 1993 as CFO and COO • Joined Investec Group board in 2010 • Joined Investec Group board
Slide 4: Demerger rationale
Demerger rationale Conclusions of Strategic Review Demerger Benefits for IAM ● The current Investec Group is too complex Independence is valued ● Limited synergies between IAM and the wider Investec Group Preserves and promotes high degree of employee ownership ● Clear geographic and client over
Slide 5: Expected shareholding structure
Expected shareholding structure Current Proposed (post demerger, listing and placing by Investec) Investec Group Up to 65 % free float upon listing Shareholders Current Ninety One Investec New public Investec staff Group shareholders IAM Investec shareholders staff Group c.20%1 c.15%3 Up to 10% 55%
Slide 6: Retaining our dual-listed structure
Retaining our dual-listed structure Enables us to remain connected to our roots Ninety One plc to be premium listed on LSE with a secondary inward listing on JSE Ninety One Limited to be listed on JSE Aligned with regulatory requirements All shareholders will have equivalent economic and voting righ
Slide 7: We are changing our name, but not who we are
We are changing our name, but not who we are 7
Slide 8: Our Board
Our Board Gareth Penny Colin Keogh Hendrik du Toit Kim McFarland Non-executive Chairman Non-executive Director (Independent) Chief Executive Officer Finance Director (Independent) Senior Independent Director Chair of the Nominations and Directors Chair of the Human Capital and Affairs Committee Remu
Slide 9: Today's agenda
Today’s agenda Key differentiators Strategic principles and priorities Financial performance and outlook 9
Slide 10: A global asset manager with an emerging market heritage
A global asset manager with an emerging market heritage A differentiated asset manager with the attributes of industry leaders Unique employee ownership and culture Superior global reach given scale Organically and sustainably built Sophisticated Institutional and Advisor client base Emerging market
Slide 11: We are a people business
We are a people business Our culture is a vital element of our long-term success Freedom to create within clear parameters of values, team and strategy We combine We strive to do We insist on individual the right thing, Our people have results but not We balance expression with Relationships for cli
Slide 12: Longevity and stability across the business
Longevity and stability across the business Differentiated by the experience and depth of our teams Investments1 Client Group2 Operations3 Executive Committee Average leadership ~15 ~ 14 ~17 ~ 20 tenure at years years years years IAM Total people 250 402 495 94 Average tenure at ~7 ~ 7 ~7 IAM years
Slide 13: Ownership and alignment
Ownership and alignment Strong staff commitment enables even greater alignment with clients and shareholders Consistent compensation framework since inception Investment of own personal capital into the business Senior management and key employees have acquired Facilitates entrepreneurial, collabora
Slide 14: Organically and sustainably built over nearly 30 years
Organically and sustainably built over nearly 30 years Established long-term growth track record in AUM £44bn of cumulative net flows since April 2009, representing ~50% of total AUM growth £179m £121bn AUM Reported profit (post NCI) 1 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY05
Slide 15: Emerging market heritage underpins growth
Emerging market heritage underpins growth Positioned for developed market demand for emerging market investments By client location1 Emerging market heritage Limited scale of South African market necessitated early internationalisation 51% £121bn 49% Founded: 1991 Now a diversified global business t
Slide 16: Distinctive specialist active strategies
Distinctive specialist active strategies Diversified and organically built class offerings1 Core asset £ 54bn £ 34bn £ 4bn £ 22bn Equities Fixed Income Alternatives Multi-Asset 53 20 11 55 24 14 skillsets2 Distinct 4Factor Quality Value Fixed Income Alternatives Multi-Asset demand Client Specialist
Slide 17: Proven investment performance track record
Proven investment performance track record Overall firm outperformance1 Latest outperformance1,2 Mutual funds outperformance3 100% 77% 10 years 10 years 50% 93% 0% 100% 63% 5 years 5 years 50% 64% 0% 100% 72% 3 years 3 years 50% 75% 0% 100% 53% 1 year 1 year 50% 54% 1st quartile 2nd quartile 0% FY00
Slide 18: Today's agenda
Today’s agenda Key differentiators Strategic principles and priorities Financial performance and outlook 18
Slide 19: Our strategic principles
Our strategic principles We offer organically- We operate globally in We have an approach to developed investment both the Institutional growth that is driven by capabilities through and Advisor space structural medium to long- active segregated through five term client demand and mandates or mutual
Slide 20: Our strategic priorities
Our strategic priorities Focus on Capture the Develop growth in Ensure growth differentiated professionally sustainability inherent in strategies, intermediated is at the core our current anticipating channels of our capability set client needs (Advisor and business Institutional) 20
Slide 21: Capture the growth inherent in our current capability set
Capture the growth inherent in our current capability set IAM’s specialist skillsets are well aligned with global growth trends Global industry AUM by Global industry revenue by asset class asset class AUM CAGR (2018 – 2023E) $330bn $101tn Passive 10% $19bn $279bn $55bn $24tn $16bn $74tn Core 2% $55
Slide 22: Diversified offering across all asset classes
Capture the growth inherent in our current capability set Diversified offering across all asset classes Equities Fixed Income Multi-Asset Alternatives £54bn £34bn £22bn £4bn Asia (inc. China) EM Sovereign & Currency Africa (inc. SA) Natural Resources (inc. Regional Global Environment) Regional UK EM
Slide 23: Develop differentiated strategies, anticipating client needs
Develop differentiated strategies, anticipating client needs Infrastructure EM Fixed Global Global Asia / Credit / Income / Local Multi-Asset Equities All China Global Currency Income Environment 23
Slide 24: Global reach
Global reach Diversified distribution across global markets, with local penetration spanning 21 offices Europe UK AUM £16bn AUM £24bn o/w Institutional 73% o/w Institutional 47% Client Group Headcount 21 Client Group Headcount 31 20% 5% 8% 4% Asia Pacific AUM £21bn o/w Institutional 89% Client Group
Slide 25: Positioned for resurgent growth in South Africa
Positioned for resurgent growth in South Africa ◼ Largest third-party asset manager by ◼ High conviction, specialist AUM 1 capabilities with dedicated and ◼ Competitive investment performance Position Proposition aligned teams in underpenetrated opportunities: ◼ Backed up by industry-leading 1. Inst
Slide 26: Sophisticated Institutional and Advisor client base
Sophisticated Institutional and Advisor client base Institutional Advisor 12% 12% 8% 12% 39% Advisor 32% 19% 35% 13% 39% 14% £82bn £39bn 14% 21% £121bn AUM 38% 21% 3 Pension Funds Retail Groups / IFAs Institutional Pension Funds Public Bodies (inc. SWFs) 1 68% Wealth Managers / Private Banks Insurer
Slide 27: Growing in the Advisor channel
Growing in the Advisor channel Access to key portfolio assemblers and financial institutions. Our solutions offering is key to capturing the growth in this market IAM’s access to portfolio assemblers, financial institutions and IAM’s strong growth in the Advisor channel selected partnerships Top 5 n
Slide 28: Growing in the Institutional channel
Growing in the Institutional channel Our differentiated capabilities enable unique entry into globalising capital pools IAM’s capabilities Example: North American Institutional AUM1 Large pool of risk-taking assets in this market Strong client-facing team $20.8tn $24.9tn 2016 2022E Move away from do
Slide 29: Purpose: Investing for a better tomorrow
Purpose: Investing for a better tomorrow Better Firm We are building a firm that aims to achieve excellence over the long term, with a culture that encourages our people to reach their highest potential and puts our clients at the centre of our business Better Investing Long-term investment excellen
Slide 30: Ensure sustainability is at the core of our business
Ensure sustainability is at the core of our business Facing up to the challenge of our generation Sustainability is a key part of our purpose as an Enhancing value for our clients, doing the right active asset manager thing, building a better world Integrating ESG in our investment processes 8 Inves
Slide 31: Ensure sustainability is at the core of our business
Ensure sustainability is at the core of our business Progress as active stewards of capital – doing this right is core to our organisational purpose Developing dedicated Active advocacy sustainability products Africa Credit & Emerging Africa Infrastructure Fund Investments in African 2016: infrastru
Slide 32: Recap of our strategic priorities
Recap of our strategic priorities Focus on Capture the Develop growth in Ensure growth differentiated professionally sustainability inherent in strategies, intermediated is at the core our current anticipating channels of our capability set client needs (Advisor and business Institutional) 32
Slide 33: Today's agenda
Today’s agenda Key differentiators Strategic principles and priorities Financial performance and outlook 33
Slide 34: Attractive financial profile
Attractive financial profile Increasing AUM, recurring revenues and cost discipline driving profit growth across cycles 121 Total AUM (£bn) 104 111 ● Long track record of increasing AUM AUM growth 29 ● Driving continued revenue growth FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 HY20 + Tot
Slide 35: AUM development over time
AUM development over time Strong AUM growth, significantly driven by net flows Torque 4.6% 4.1% (0.8)% 5.6% 5.9% 5.8%2 ratio1: +6.2 120.8 +3.2 +6.1 +1.5 111.4 AUM in £bn +3.2 103.9 +5.4 +20.2 95.3 +3.2 +6.4 77.5 75.7 +3.1 - 68.0 (5.0) (0.6) FY14 Markets / FY15 Markets / FY16 Markets / FY17 Markets /
Slide 36: Consistent and diversified flows
Consistent and diversified flows Substantial and diversified net flows Net flows by channel (£bn) Net flows by asset class (£bn) 2.6 3.1 3.2 (0.6) 5.4 6.1 3.2 2.6 3.1 3.2 (0.6) 5.4 6.1 3.2 FY14 FY15 FY16 FY17 FY18 FY19 HY20 FY14 FY15 FY16 FY17 FY18 FY19 HY20 Advisor Institutional Equities Fixed Inco
Slide 37: Summary financials (page 1 of 2)
Summary financials (page 1 of 2) £m, unless stated FY18 FY19 % Change HY19 HY20 % Change Closing AUM (in £bn) 103.9 111.4 7% 109.2 120.8 11% Average AUM (in £bn) 99.6 108.0 8% 107.9 117.8 9% Management fees 495.4 524.6 6% 263.8 283.1 7% Management fee rate (bps) 49.7 48.6 48.8 47.9 Performance fees
Slide 38: Summary financials (page 2 of 2)
Summary financials (page 2 of 2) £m, unless stated FY18 FY19 % Change HY19 HY20 % Change Operating profit (pre-Silica and exceptional items) 171.4 172.5 1% 88.1 94.1 7% Net interest income 5.3 5.5 4% 2.7 2.3 (14)% Silica profit 1.4 1.4 (2)% 0.7 0.9 19% Reported profit (pre-exceptional items) 178.0 1
Slide 39: Analysis of operating expenses
Analysis of operating expenses Analysis of expense growth (HY20, £m) Breakdown of non-staff expenses1 (HY20) 7 2 3 1 198 185 14% Non-staff expenses Fund Administration 28% 6% Accommodation 65% Staff expenses Systems 66% 10% Information Promotional HY19 Staff Systems and New Other HY20 expenses infor
Slide 40: On-going listed company expenses and exceptional items
On-going listed company expenses and exceptional items FY19 H120 H220 FY21 £m (actual) (actual) (estimate) guidance Increase in marketing Recurring New corporate functions and replacement services 0.2 1.1 c.2.2 expenses Operating expenses Non- Double accommodation, duplicate expenses 2.7 3.1 c.3.4 D
Slide 41: Our approach to growth and efficiency
Our approach to growth and efficiency We already have a firm foundation for growth, which can be enhanced by further efficiencies Status quo: Additional initiatives to enhance our efficiency: Further outsourcing across the value chain Improving investment technology IAM has a platform able to suppor
Slide 42: Balance sheet and capital
Balance sheet and capital Capital-light model1 Highly cash generative No long-term debt Sufficiently capitalised 42 Notes: 1. Total shareholders equity of £202m, as at 30 September 2019.
Slide 43: Dividend policy
Dividend policy Since FY09, IAM has paid out £1.3bn in dividends Dividend Policy £1.3bn 1,400 Ordinary: 50% payout1 Cumulative dividends (£m) 1,200 1,000 800 + 600 Special: 400 Surplus capital2 200 - FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 HY20 43 Notes: Cumulative dividends excludes
Slide 44: A clear strategy to deliver returns to our shareholders
A clear strategy to deliver returns to our shareholders IAM has a solid, well-invested platform and a successful history of long-term organic growth Track Strong culture and Global Ownership Clients record team longevity reach model Our growth strategy builds on our existing strengths – we remain co
Slide 45: Winston Churchill quotation
“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” Winston Churchill 45
Slide 46: Q&A
Q&A 46
Slide 47: Disclaimer
Disclaimer This presentation (the “Presentation”) has been prepared by Investec plc and Investec Limited (together, the “Company”) and their subsidiaries from time to time (the “Group”) solely for use at the investor meeting held on 3 December 2019. By reading the Presentation, you agree to be bound
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