VISIO FUND MANAGEMENT
Transcript of VISIO FUND MANAGEMENT
VISIO FUND MANAGEMENT
VISIO BCI GENERAL EQUITY FUNDMARCH 2021
Private and strictly confidential
The 6 senior team members together
Team experience ranging from 4 to 31yrs.
Investment team has a combined experience of 272
years and average experience of 17 years
12 YEARS
Staff
Owned
68% 32%Royal Investment
Managers (RIM)
Firm AUM of R35bn
SA Pension fund
mandatesand unit trusts:
SA Hedge funds
(long/short equity
& market neutral):
SA Multi Asset and
Fixed Interest:
(Balanced Fund
launched Sep-2019)
R32bn
R1.0bn
R1.4bn
$40m
R40m
Pan-Africa funds:
Shareholding :
RIM is a Royal Bafokeng JV with Rand Merchant Investments.
Pension funds,
sovereign wealth funds,
fund-of-funds,
family offices
and private clients.
(SA, Europe, US and Asia)
Johannesburg head office
Cape Town
Visio was founded in
and is a UNPRI signatory.
2003 17INVESTMENT PROFESSIONALS,
8 support staff and a business
development manager.
Predominantly
institutional
client base,
domestic and
internationalB-BBEE
2
London2
Property fund:
KEY PRE-REQUISITES:
STRONG CORPORATE GOVERNANCE
EXPERIENCED MANAGEMENT
STRONG FREE CASH GENERATION
SOLID BALANCE SHEETS
DOMESTIC CHAMPIONS
SA’s largest private hospital group
SA’s largest integrated motor group
Africa’s largest mobile operator. Cell towers (IHS) to list in NY.
Premium banking, SOTP valuation opportunity
SPECIAL OPPORTUNITIES
Cyclical low, lowest on the global cost curve, ESG
New management and strategy direction - ARC 33%
Life assurer – management change, solid balance sheet
Leading SA’s largest fast-food group at decade lows
SA’s largest discount clothing retailer
PGM = EV exposure
LONG TERM GROWTH OPPORTUNITY - SA
SA’s largest private education –schools & universities
Commuter transport and debt collection
Diversified global seafood business
3
INVESTMENT THEMESPROVEN OFFSHORE & GLOBAL COMPANIES
Internet investor and 31% Tencent stake
European packaging & ESG
UK wealth management
Global resources
PROPERTY OPPORTUNITIES
Value in a ‘bombed out’ sector
SELECT DOMESTIC OVERWEIGHT HOLDINGS:
> Capital light – Quilter, Famous Brands
> Strong management teams – Transaction Capital, Motus, Afrimat
> Commodities – Impala Platinum, Anglo American, BHP Plc
> Liquidity and Inflation hedge – Anglogold, GoldFields, Sibanye
> Healthcare – Netcare, Life Healthcare, Dischem
> ESG – Mondi, Sea Harvest
> Possible corporate activity – Liberty Life, Investec
> Asia/China – Naspers, BHP Plc
TENCENT / AN AMAZING ASSET MANAGER
5
- 100 200 300 400 500 600 700 800 900
GDS HOLDINGS LTD - ADR
BILIBILI INC-SPONSORED ADR
TENCENT MUSIC ENTERTAINM-ADR
JD HEALTH INTERNATIONAL INC
NIO INC - ADR
XIAOMI CORP-CLASS B
BAIDU INC - SPON ADR
JD.COM INC-ADR
KUAISHOU TECHNOLOGY
PINDUODUO INC-ADR
MEITUAN-CLASS B
PING AN INSURANCE GROUP CO-H
ALIBABA GROUP HOLDING-SP ADR
TENCENT HOLDINGS LTD
MARKET CAPS OF TENCENT INVESTMENTS IN CHINA
TENCENT INVESTMENT
- 5 10 15 20 25 30
KAKAO CORP
FOXCONN INDUSTRIAL INTERNE-A
NETMARBLE CORP
ACTIVISION BLIZZARD INC
SPOTIFY TECHNOLOGY SA
SNAP INC - A
SEA LTD-ADR
TESLA INC
CURRENT VALUE OF TENCENT GLOBAL INVESTMENTS
USD bn
USD bn
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DISCHEM / EARLY STAGE PLAYER IN CONSOLIDATING MARKETCONSOLIDATION AND LOW PHARMACY PENETRATION
> In the sweet spot of consolidating pharmacy market
> Only has 182 stores giving it 6% pharmacy store market share
> Market share increased 78% over 6 years vs 48% for Clicks
> Aging independent pharmacists selling to corporate
> Increasing generics market share puts pressure on independent
pharmacies - no scale and limited front shops
> Driving revenues and future acquisition targets into independent
pharmacies through TLC franchise
> Long term growth through pharmacies in underserved communities
HIGH RETURNS COUPLED WITH HIGH EARNINGS GROWTH
> Although we see marginal earnings increase in 2021, we expect 22%
3-year CAGR in future
> Opportunity for further upside should operating margins recover
quicker than we expect
> Acquisitions are complementary to existing business and position the
business for transforming healthcare market – e.g. Telemedicine
> Healthy Balance Sheet with Net Debt to Equity less than 5% pre
acquisitions
> Generates ROE of +25% and ROIC of +30%
0
2
4
6
8
10
12
Pharmacists (per 10 000 population)
0%
1%
2%
3%
4%
5%
6%
2014 2015 2016 2017 2018 2019
Dis-Chem Store Market Share
-10 000
-
10 000
20 000
30 000
40 000
50 000
EBITDA Contribution $ mil Iron ore Petroleum Potash Copper Met Coal Thermal Coal
Copper
OIL Metcoal
Iron Ore 62%Shanghai Copper Inventory
BHP GROUP / LONG TERM COMMODITY PRICES
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TRANSACTION CAPITAL / FILLING THE PUBLIC TRANSPORT GAPSA TAXI FINANCE – ONE OF SA’S LARGEST SME’S
• Only taxi financier in the country of scale
• 240 000 minibus taxis, 80 000 nationally are financed
• 32 890 financed by SA Taxi – remainder of market fragmented
• Vertically integrated
• Owns panel beaters, dealerships, insurance etc.
• Traditional financiers - difficult to compete
• Acquired a non-controlling interest of 49.9% in WeBuyCars in September 2020
COLLECTIONS BUSINESS
• Collection business on both principal & agency basis
• 24 million credit active consumers in South Africa, of which 11 million
are “over indebted”, up from 5 million in 2014
• Significant growth potential for Collections Business
GENERAL
• 5 year share price CAGR: 17.1%
• Conservative management team, strong balance sheet
• Essentially a promoter of small business enterprise in SA
WHAT WE ARE AVOIDING
STRUCTURAL HEADWINDS
• Pandemic expedited weaknesses –
implications of working from home, online
shopping, consumer behavioural changes, etc
• Companies unable to adjust to the “new
normal” through innovation therefore being
gradually disintermediated.
• Examples range from large banks, life assurers,
certain property REITS.
CREDIT DEPENDENT RETAILERS
• Distressed consumers = risks of defaults
• Disposable income increasingly under pressure
• Unhealthy credit books, inadequate provisions,
‘stale’ business model
ESG RED FLAGS
• Governance is critical
• Don’t ignore aggressive accounting
• Regulatory driven “Green” recovery
VULNERABLE BUSINESS MODELS
• High debt levels – balance sheet a risk
to survival.
• Access to liquidity constrained
• Exposed to an intense regulatory
environment
• Examples include gaming and
construction
PERSISTENT ROLLING OF LOANS AGGRAVATING POVERTY NATIONWIDE
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RECKLESS LENDING AGGRAVATING POVERTY NATIONWIDE
TransUnion, Econometrix
RESPONSIBLE INVESTING / CORE TO VISIO’S INVESTMENT PHILOSOPHY
VISIO HAS BEEN A UN PRI SIGNATORY SINCE 2012
WE RECOGNISE THAT SUSTAINABILITY AND
“GOING CONCERN” GO HAND-IN-HAND AND WILL
DRIVE LONG TERM RETURNS
> 2018 and 2019 demonstrated importance of Governance oversight (Omnia, Tongaat)
> Rising risk of intervention (government, civil organisations, etc.) if Sustainability issues not addressed
> RAP framework for companies – qualitative overlay to our quantitative process
> Cognizant of the constraints of the investment universe (Sasol, BTI)
> But willing to avoid returns for socially unacceptable practices (i.e. unsecured lending)
> We sponsor research and raise awareness of key social concerns (i.e. unsecured lending practices)
VISIO EXPOSURES / TO THE 17 U.N. SUSTAINABLE DEVELOPMENT GOALS
MEANINGFUL ENGAGEMENT / THE VISIO DIFFERENTIATORCOMPANY ISSUES DATE OUTCOME
COMPANY A Value realisation for UK Specialist Bank 2021 Ongoing interaction
COMPANY B Company disclosure & Board skills 2018 / 2020 Ongoing interaction
COMPANY C Capital allocation & strategy 2020Concluded, did not go ahead with the acquisition. Share rerated considerably. Now net cash.
COMPANY DProject execution, debt positioning
2019/2020Joint CEO departure, better remuneration policy. Insufficient changes, weak management and board. Sasol is no longer a position in the funds.Market communication
COMPANY E Board composition; Disclosure 2017/18 New chairman, board changes.
COMPANY F ESG Policies - Listeriosis Outbreak 2018 No longer a position in the funds; TBS facing litigation
COMPANY G Executive & board under-performance 2018Ongoing interaction
CEO resigns in Q1 2019
COMPANY H Board composition - Chairmanship 2018 Ongoing interaction
COMPANY I Company disclosure 2018 Ongoing interaction
COMPANY J Allocation of capital & strategy re UK ops 2017 Positive outcome
COMPANY K Allocation of capital & strategy 2017Early days – but new CEO & Chairperson. Ongoing interaction
COMPANY L Capital Allocation & returns to shareholders 2017 Company declared spec dividend in 2018.
COMPANY M Board composition & independence 2017 Pending investigation
COMPANY NBoard composition
2015New CEO
Rights issue size and costs Significant board changes
COMPANY OPoor disclosure
2015/2019Ongoing interaction
Insufficient management incentivisation Significant value unlock
VISIO BCI FUNDS / PERFORMANCE (ZAR)
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Source: Moneymate as at 28 February 2021. Past performance is not a reliable indicator of future returns. Investment performance is for illustrative purposes only and is calculated by taking actual initial fees and ongoing fees into account for amount shown with income reinvested on reinvestment dates. Annualised return is weighted average compound growth rate over the period measured. Benchmarks:ASISA SA Equity General, SA Multi Asset Flex, SA Multi Asset HighEquity, SA Multi-Asset Income category average
Actual annual figures are available to the investor on request.
Name:Year to Date
Quartile Rank
6 Months To:
28/02/2021
Quartile Rank
1 Year To:
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Quartile Rank
2 Years To:
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Quartile Rank
3 Years To:
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Quartile Rank
6 Years To:
28/02/2021
Quartile Rank
Sinceincept.
ann.
Launchdate
Highest annual return
Lowest annual return
Visio BCI General Equity Fund - A 12,29% 1 20,14% 2 23,61% 2 13,10% 3 5,08% 3 14,29% 3 4.66% 04/04/14 10.96% -9.51%
Visio BCI SA Equity Fund - B8 12,39% 1 22,30% 1 23,43% 2 9,99% 3 3,53% 3 2.54% 06/06/17 1.82% -7.34%
BCI Shari'ah Equity Fund - C 11,31% 1 16,18% 3 26,42% 2 24,29% 1 8.03% 14/06/18 7.81% 5.67%
SA - Equity - General 8,79% 17,61% 22,50% 14,75% 26,19%
Name:Year to Date
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2 Years To:
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3 Years To:
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6 Years To:
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Sinceincept.
ann.
Launchdate
Highest annual return
Lowest annual return
Visio BCI Actinio Portfolio - R 11,80% 1 17,11% 1 20,09% 2 21,04% 2 17,43% 3 27,58% 3 15.39% 01/04/04 36.51% -14.92%
SA - Multi Aset - Flex 6,04% 11,58% 16,75% 15,84% 16,76% 32,88%
Name:Year to Date
Quartile Rank
6 Months To:
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ann.
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Lowest annual return
Visio BCI Balanced Fund - A 7,37% 1 12,52% 2 27,74% 1 22.89% 04/12/19 16.85% 16.85%
SA -Mut Aset High Eq 5,87% 10,11% 15,75%
Name:Year to Date
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Quartile Rank
1 Year To:
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Sinceincept.
ann.
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Highest annual return
Lowest annual return
Visio BCI Unconstrained Fixed Interest Fund - A 1,82% 1 5,85% 1 8,03% 1 17,12% 1 26,18% 1 8.37% 01/04/16 9.46% 6.00%
SA Multi Aset - Income 0,84% 3,63% 5,85% 13,77% 22,54%
VISIO FUNDS
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FUND FACTORS UNCONSTRAINED FI BALANCED PROPERTY SA LONG-ONLY EQUITY HEDGE AFRICA
COMPETITIVE FOCUSRisk Management / Asset
Allocation / Duration Mng
Asset class
optimisation / Risk
management / Stock
selection / Macro
Global listed real estate Specialist equity
Risk Management / Asset
Allocation / Downside
protection
EM growth focus
PORTFOLIO BENEFITS Asset allocation across FI Asset allocation Property alpha Equity alpha Uncorrelated alpha EM Growth
OBJECTIVE
Manage volatility whilst
max. capital returns and
income. Not lose capital
over rolling 6 months.
All-in investor solution
Income and capital
appreciation at low
volatility. CPI+5 over
rolling 3 years
Provide a combination
of high income growth
and long term capital
appreciation.
Sustain high long-term capital
growth
Generate absolute returns
with lower correlation to
equity markets
Targets positive returns to
businesses that generate
significant portion of their
earnings from Africa.
BENCHMARK STeFi Composite x 1.25ASISA SA Multi Asset High
Equity category average
FTSE JSE J253T Real
Estate IndexSWIX, Capped SWIX, CAPI STEFI
MSCI EFM Africa ex-SA
Index
INVESTABLE UNIVERSE
Fixed income, listed
property, preference
shares, derivatives,
currency
Equity, fixed income,
listed property,
preference shares,
derivatives, currency
Property securities &
CIS, real estate equity,
FI & money market
Instruments
Domestic equity securities &
property related
securities
Domestic & offshore equity,
fixed income, listed
property, preference shares,
derivatives & currency
Securities listed on
worldwide exchanges that
provide exposure to
businesses that generate
significant portion of their
earnings from Africa
AUM R1.4bn R52m R40m R32bn R1.0bn $40m
ANN. RETURNS SINCE
INCEPTION8.2% 22.6% n.a. 10.4% (SWIX) 18.5% +1.6% (USD)
TRACK RECORD 4 years >1 year 8 months 13 years 17 years 11 years
REG COMPLIANCE CISCA + Reg28 CISCA + Reg28 CISCA CISCA CISCA
INCEPTION Apr 2016 Oct 2019 July 2020 Nov 2007 Nov 2003 Jun 2009
Contact details
CAPE TOWN
Unit 704, 7th floor, Touchstone House, 7 Bree Street, Cape Town, 8001
> +27 10 020 6263 (Tel)
JOHANNESBURG
5th Floor, 92 Rivonia Road, Wierda Valley, Sandton, 2196
> + 27 11 245 8900 (Tel)
> +27 11 245 8915 (Fax)
Thank you
Disclaimer
Boutique Collective Investments (RF) (Pty) Ltd (“BCI”) is a registered Manager of the Boutique Collective Investments Scheme, approved
in terms of the Collective Investments Schemes Control Act, No 45 of 2002 and is a full member of the Association for Savings and
Investment SA.
Collective Investment Schemes in securities are generally medium to long term investments. The value of participatory interests may go
up or down and past performance is not necessarily an indication of future performance. The Manager does not guarantee the capital or
the return of a portfolio. Collective Investments are traded at ruling prices and can engage in borrowing and scrip lending. A schedule of
fees, charges and maximum commissions is available on request. BCI reserves the right to close the portfolio to new investors and
reopen certain portfolios from time to time in order to manage them more efficiently. Additional information, including application
forms, annual or quarterly reports can be obtained from BCI, free of charge.
Performance figures quoted for the portfolio is from Morningstar, as at the date of this document for a lump sum investment, using
NAV-NAV with income reinvested and do not take any upfront manager’s charge into account. Income distributions are declared on the
ex-dividend date. Actual investment performance will differ based on the initial fees charge applicable, the actual investment date, the
date of reinvestment and dividend withholding tax.
Investments in foreign securities may include additional risks such as potential constraints on liquidity and repatriation of funds,
macroeconomic risk, political risk, foreign exchange risk, tax risk, settlement risk as well as potential limitations on the availability of
market information.
Boutique Collective Investments (RF) Pty Ltd retains full legal responsibility for the third party named portfolio.
Although reasonable steps have been taken to ensure the validity and accuracy of the information in this document, BCI does not accept
any responsibility for any claim, damages, loss or expense, however it arises, out of or in connection with the information in this
document, whether by a client, investor or intermediary. This document should not be seen as an offer to purchase any specific product
and is not to be construed as advice or guidance in any form whatsoever. Investors are encouraged to obtain independent professional
investment and taxation advice before investing with or in any of BCI/the Manager’s products.
Visio Fund Management (Pty) Ltd is an authorised Financial Service Provider FSP 49566.