Press / Media | Cadiz News
Cadiz to reassess strategy after SA returns to real life
01 June 2010
CADIZ Holdings CEO Ram Barkai said yesterday the company would wait until SA “returns to real life" following the Soccer World Cup before reassessing the cautious investment strategy imposed during the downturn, warning “the dust has not yet settled" from the financial crisis.
Cadiz saw its net profit grow 44% to R90,3m in the year to March, a result due largely to improved investment performance at its asset and wealth management unit, which garnered increased performance fees in the period.
“The quality of the assets under management has been enhanced by attracting higher yielding assets, while an increasing proportion of assets are exposed to performance fees," the company said in its annual results statement. Total assets under management grew 14% to R52,2bn, but Mr Barkai said growing this figure further was not a priority in these economic conditions.
Unit trust assets under management more than doubled to R5.1 bn in the period, helping Cadiz's retail funds grew 14% to R9,8bn.
He pointed to recent rankings from investment resource Morning star, which put four of Cadiz's six unit trusts in the top 10 out of 496 funds in the three years to March, with its strongest performer giving a return of 70.3%. "We've been through rough water, but we're now starting to get recognition in the retail market. The business is still small and we are focusing on the higher end of the market. But it's passed the point of critical mass."
Cadiz had reacted swiftly after the near-bankruptcy of Bear Stearns in March 2008, cutting salaries and imposing a moratorium on hiring.
“We are now easing that: we've increased salaries in line with benchmarks, we've resumed hiring and we're expanding in areas of growth. But there's still a clear mindset of awareness," Mr Barkai said. Cadiz's equity derivatives arm had kept its position as the leading independent broker by volume on the South African Futures Exchange, but the market saw a 67% fall in trading volumes during the year to March.
Despite this the securities division increased profit 2% to R74,lm.
Cadiz would be well placed to capitalise on an eventual recovery in the derivatives market, and would focus on expanding its product offering to existing clients rather than growing market share.
