RMI Investment Managers and Royal Investment Managers (RIM) will acquire a combined stake of up to 30% in Ethos Private Equity, AGF has learned.  

The transaction will be effective by the end of September and is not subject to regulatory approval or outstanding conditions. 

Chris Meyer, CEO of RMI Investment Managers, said: “Ethos is widely considered to be the most experienced and successful private equity business and investment team in South Africa.”

“We are proud to be partnering Ethos in the next phase of its growth and adding our expertise to their legacy as the premier private equity firm in South Africa,” he said. 

This transaction includes a vendor-facilitated BEE component that will ensure that 25% of the company continues to be owned by a broad base of historically disadvantaged shareholders (including Black Ethos executives, staff and the Ethos Educational Foundation Trust). 

Kabelo Rikhotso, CEO of Royal Investment Managers added: “The transaction fulfils the typical characteristics we look for in acquiring minority equity stakes in asset management business, most notably the genuine embracing of diversity – which to RIM means black participation not only at the ownership, management and employee level but more importantly at the investment team level.” 

“We will support the continued recruitment of and advancement of black professionals in the Firm and look forward to an enduring partnership with Ethos.”

The capital raised will enable Ethos to accelerate the execution of its strategy of building the leading alternative asset management business in Sub-Saharan Africa.

The brands, expertise and experience in growing investment management businesses of the RMI & RIM Consortium will contribute significantly to the execution of Ethos’ growth strategy.

The RMI & RIM Consortium will play an important role in enhancing Ethos’ distribution networks with the aim of reaching a broader constituency of potential investors.

This strategic partnership will contribute towards the creation of a sustainable BEE ownership solution and assist Ethos in the furthering of its transformation initiatives.

The transaction will facilitate intergenerational succession in the Firm through a transfer of ownership between the Partners of Ethos; whilst ensuring that a majority of the Firm will continue to be owned by the Partners and Executives that work in it.

As a consequence of the transaction, Ethos’ board of directors will be reconfigured to include representatives from the RMI & RIM Consortium and Ethos executives, and will continue to be independently chaired by Peter Mageza.  

Stuart MacKenzie, Ethos CEO, said: “Up to this point the strategic expansion of the Firm has been funded by its Partners. In order for us to accelerate the Firm’s growth in a sustainable way, we recognised the significant benefit of attracting strategic investors that would share our vision.” 

“The cultural affinity between the Ethos, RMI and RIM teams has been nurtured over many years of business collaboration. The RMI & RIM Consortium’s endorsement of our strategy will enable us to accelerate the realisation of our vision by opening new investor networks, providing asset management expertise and a focus on the accelerated transformation of our Firm.  Together, we share a vision of matching the best capital solutions with the best business ideas,” he said.