PSG Konsult: No ‘meaningful’ emigration among clients as SA’s capital markets shine | Fin24

PSG Konsult CEO Francois Gouws.

• PSG Konsult published its interim results for the six months to end-August on Thursday.
• The financial services firm exceeded its pre-Covid-19 performance, thanks partly to how its pro-SA Inc strategy paid off.
• CEO Francois Gouws says clients are talking about emigration, but there has not been a significant number of clients leaving.

PSG Konsult recorded massive inflows into its wealth and asset management businesses in the six months to end-August, pushing its profits to way above pre-Covid-19 levels.

The financial services firm, which is 60.7% owned by the PSG Group, increased recurring headline earnings per share by 23%. This put its earnings roughly 30% above the six months ended on 31 August 2019.

PSG Wealth recorded net inflows of R10.8 billion, an increase of 40% from August 2020, while PSG Asset Management grew its assets under administration to R161.5 billion, a 13% increase since February 2021. The group’s smallest business, PSG Insure, also collected R2.82 billion in gross written premiums, 3% higher than at the end of August 2019.

PSG Konsult CEO Francois Gouws attributed this to being ahead of some of their peers in terms of moving to do more business digitally and ditching the paper before Covid-19. And throughout the period of panic, the company engaged its clients more.

“We were quite fortuitous that we built that prior to the arrival of Covid-19. It would have been impossible to get that all of that ready during the current period,” said Gouws.

During the periods of panic, such as the July unrest, Gouws said PSG Wealth continued to see more clients wanting offshore exposure. But that business is different from the firm’s asset management unit since it’s there to help investors who want to diversify their risk across geographies any way.

PSG Asset Management, on the other hand, has always been an advocate of SA Inc stocks. And as the JSE hit record highs earlier this year, that strategy paid off for the asset management business. Gouws said PSG Asset Management’s equity funds were up by almost 50% in the last 12 months.

“I remember having these kinds of discussions a year ago. And all our competitors were saying we’re not so sure about South Africa. And now that the performance has come through, everybody suddenly is positive about South Africa,” said Gouws.

From offshore exposure to emigration?

While SA Inc is now considered lekker by more asset managers, some local investors would still rather have more of their money offshore.

PSG Konsult’s clients, especially the wealth business’ customer base, has always been eager to get more exposure offshore to diversify its risks, especially as the listings on the JSE continue to shrink. But Gouws said their political concerns became slightly more acute after the July riots.

“That created quite a bit of uncertainty. And obviously, there was some pressure from some of the clients to further diversify their assets,” he said.

Gouws said the company has, however, been trying to preach calmness. 

“Notwithstanding the riots and the difficulties, the rand has been remarkably stable, and the asset prices in South Africa have actually been very good. We’ll see how this plays out. But I think it’s a little bit early to see if this is going to lead to more emigration,” he said.

Gouws said many of PSG Konsult’s clients are keen to first see what will happen in the upcoming budget speech, the looming municipal elections and the ANC’s national elective conference in 2022.

“Of course, a number of people are talking about emigration, but we haven’t really seen any meaningful numbers of our clients emigrating or flows leaving the business. In reverse, I think people are actually saving up more and that’s why we’ve got R11 billion of net inflows,” said Gouws.

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