South Africa’s newest majority black-owned and controlled asset management business with R62bn ($5bn) AUM, in which MMI Holdings will be a shareholder, is set to commence operations in October 2015, according to CEO Designate Sibusiso Mabuza.

Mabuza, CEO of MMI’s Investments and Savings Centre of Excellence, also formerly CEO of Momentum Asset Management, together with several key individuals of his management team, are acquiring a portion of the Momentum Asset Management business from MMI Holdings.

The acquisition will be financed by both MMI and the key individuals.

“We are pleased and excited about this opportunity and look forward to a meaningful and constructive strategic partnership with MMI. The new entity will be an independently managed and branded asset management business with fixed income, equity, multi-asset class and frontier investment capabilities,” said Mabuza.

Nicolaas Kruger, MMI CEO, said MMI expects significant growth in the market share of black-owned asset management businesses: “We believe that a strategic partnership of this nature will create significant transformational and economic value for all stakeholders.”

Commenting on a management buyout of a portion of the asset management business, Kruger said: “This agreement is in line with both our client-centric strategy, which has set financial wellness as our core value proposition to clients, as well as the recent restructuring of MMI’s operating model into segment-driven businesses, supported by world-class product capabilities from its Product Centres of Excellence”.

Kruger said that the MMI Investment and Savings Centre of Excellence has consolidated all MMI’s investment capabilities under a single business and adopted a business model that will be guided by our innovative outcomes-based investment approach.

“This approach is aimed at delivering a consistent and predictable return profile for investors by diversifying their investments between various asset strategies and asset managers. It represents a fundamental shift in strategic direction for some of our investment businesses, most notably, Momentum Asset Management,” he said.

Under the outcomes-based investment strategy, MMI will be looking to partner with independent asset managers for the more active, equity-based asset strategies, whilst continuing to manage a number of strategies in-house.

“In addition to this partnership, MMI will also support the initiative of Rand Merchant Insurance (RMI) to partner with independent asset managers, through the newly formed RMI Affiliated Managers Group,” said Kruger.