Cape Town, Jan 16 – Shareholders of Ninety One, a prominent asset manager with bases in London and Cape Town, have expressed apprehensions over the potential dilution of their rights and investments. The company faced resistance from a significant portion of its stakeholders, with 20% voting against the general authority to issue ordinary shares for cash, in accordance with the listings requirements of the local bourse.

In response to shareholder concerns, the company’s board issued a statement on Tuesday, acknowledging the unease among investors. The statement affirmed, “The board recognizes shareholder concerns regarding the dilution of their rights and investments and reiterates that it now has no intention to issue new shares under the general authority. Notwithstanding this, the board believes that the general authority is important for maintaining flexibility and optionality in Ninety One’s capital management.”

The company emphasized its commitment to ongoing communication with shareholders, stating, “The board will continue to engage with a wide range of shareholders in the coming months to further understand their position on the matter of share issuance under the general authority and will provide an update in the Integrated Annual Report 2024.”

Despite the concerns surrounding share issuance, Ninety One reported a slight upturn in its assets under management during the third quarter of 2024. Led by Hendrik du Toit, the group disclosed that its assets under custody reached £124.2 billion, marking an increase from £123.1 billion three months earlier. However, the company experienced a loss of £4.3 billion in assets under management in the six months ending September, bringing its overall assets under custody to £123.1 billion, primarily due to pressures on its UK business.

Du Toit expressed satisfaction with the company’s performance in the South African market, stating that they have held up well. However, he voiced concerns about the long-term prospects if the economy fails to generate jobs and wealth.

Shareholder Concerns

The shareholders’ resistance to the general authority to issue ordinary shares for cash underscores the delicate balance companies like Ninety One must strike between capital management flexibility and addressing investor concerns. While the board has reassured shareholders of its current intentions, the broader question of how companies navigate such issues while maintaining investor confidence remains.

Ninety One’s emphasis on ongoing engagement with shareholders is a positive step toward building trust and understanding. Clear communication about the company’s capital management strategy, the reasons behind the need for flexibility, and measures to ensure responsible use of such authority will be crucial in assuaging shareholder concerns.

Assets Under Management

The reported increase in assets under custody during the third quarter is a positive indicator for Ninety One. The £1.1 billion uptick reflects resilience in the face of challenges, particularly considering the loss of £4.3 billion in assets under management in the preceding six months.

The concerns in the UK market, where Ninety One experienced a significant loss in assets, highlight the challenges posed by external factors. Economic pressures and uncertainties can impact the performance of financial institutions, and Ninety One’s experience serves as a reminder of the need for robust risk management strategies.

CEO’s Concerns and Market Outlook

Hendrik du Toit’s apprehensions about the South African market’s long-term prospects shed light on the broader economic challenges facing the country. The CEO’s focus on job creation and wealth generation underscores the interconnectedness of economic factors and the asset management industry. Investors will likely monitor the economic developments in South Africa closely, as it could impact Ninety One’s performance and their investments.

Looking Ahead: Integrated Annual Report 2024

Shareholders eagerly await the Integrated Annual Report 2024, where Ninety One’s board has promised an update on the matter of share issuance under the general authority. The report will likely play a pivotal role in shaping investor sentiment and confidence. Clarity on the company’s future capital management plans, in conjunction with insights into its financial performance, will be essential for shareholders to make informed decisions.

Ninety One finds itself at a crucial juncture, balancing shareholder concerns with the imperative for capital management flexibility. The coming months will test the company’s ability to navigate these challenges while maintaining its financial health and investor trust. Engaging with shareholders and providing transparent communication will be key to overcoming the current uncertainties and ensuring a stable future for Ninety One.