More than two decades since he followed a girlfriend to London, chartered accountant Reg Bamford is still in the UK, having turned his early experiences into a business that helps his countrymen who have decided to emigrate to Britain. The Sable Group, which has offices in Cape Town, Melbourne and Mauritius as well as the London head office, is now a 180 person outfit that specialises in foreign exchange, migration visas, wealth management and resettlement of emigrating South Africans. In this interview with Biznews.com’s Alec Hogg, CEO Bamford and fellow director Mike Abbott tell the Sable Group story – and highlight an unusual investment destination that weak currency strapped migrants should investigate.
Alec Hogg is in the SabIe Group’s London head office. He’s with CEO Reg Bamford and fellow director Mike Abbott. Reg what was the motivation behind Sable?
I suppose like many South Africans you come over here and you think youâre only going to spend a couple of months, or perhaps a year or two but each year that goes by opportunities arise, and you put down more and more roots. Then you stay and the next thing you know itâs been ten years and the thought of going back, well itâs such a lovely country to go back to, and you just end up staying. That is the position I find myself in. I still say to my mum now, even now, âMum, in a couple of years I know Iâll be back,â but I think she probably knows now that thatâs not going to happen.
Well itâs been 20 years. You started off with a very interesting name for a company, 1st Contact, and focussed on South Africans, New Zealanders, and Australians no doubt, who came to London for the first time and were kind of clueless as you must have been when you first arrived?
Yes, so that was a business I started after about three years here. I suppose it was quite fortuitous in a sense because we had just re-joined the Commonwealth and young South Africans were able to come over here on that two year working holiday visa. There was a flood of young South Africans coming over and they needed a bunch of services and help when they first got here. I set up this business called 1st Contact targeting them and offering a range of services and we grew hugely. We had a whole bunch of fun setting up all these services that these people needed.
Migrating your business to the UK? Here are some ways you can ensure you stay on top of your cash flow requirements. https://t.co/sxOKCifjhs
— Sable International (@Sable_Intl) June 7, 2016
That developed, still further over the years, to merge with Sable, which was a private wealth business. I presume, Mike Abbot that thatâs where you came in?
I originally joined back in 2006, to start the property advice and mortgage broker inside of the business and then moved across into the wealth business a few years after that.
Does 1st Contact still survive, Reg?
Yes, it does. That is still a very vibrant part of our business. Now, of course young South Africans donât have the ability to get that two year working holiday visa, so the volumes that weâre seeing arenât quite there yet, but itâs still a significant part of our business.
I presume, given whatâs happening in South Africa that there is a different type of Ă©migrĂ© who is arriving on your doorstep now.
Yes, I think it was fair to say that those young South Africans coming over were doing so because they wanted to spend a year or two, just to see the world and perhaps work, travel, and play. It was almost like a rite of passage because their brothers or sisters had done it and thatâs certainly still the case with all the Aussies and Kiwis. They still come over but they come over with a very clear mind-set that theyâre only going to spend a year or two here. What weâre finding now is that people are coming over here primarily because they want to see what sort of prospects are here and perhaps if they do come over itâs with a longer term plan.
Read also:Â Emigration expert JP Breytenbach: Economics strongest motivator for SAs moving to UK
How well prepared are they, before arriving, generally?
Look, there are worries that they have, whether their work experience in South Africa will count. Theyâre unsure about things that I now take for granted, like what to wear to an interview. Quite often I will be surprised by those sort of questions â what should I wear? Look, needs must. Iâm always a great believer that South Africans are great pioneers. The last two, three, or four hundred years have built in a certain deep resilience and theyâre a very enterprising bunch of people coming over.
Primarily white?
Primarily, yes. The links between South Africa and the UK are very strong and very recent, so many of these people have parents or grandparents, or great-grandparents who were born here, so itâs not as if theyâre going to a brand new country. They almost feel a sense of kinship here.
Then getting citizenship, getting the ability to stay in this country must be, perhaps more challenging than it was in the past, given the focus now on immigration.
No, certainly look the climate here, politically, is one of making it very difficult for foreigners to settle here. Itâs quite a long process. It takes five or six years but I think once these South Africans find themselves a job here. In the first six months or so, they might be a bit homesick and they might miss the sun, miss the sport, and miss the lifestyle but they knuckle down for the five or six years. Hence, they get the passport, which I think is quite strong.
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Mike, what kind of emigrant from South Africa has been successful and clearly a lot of them would have come through your organisation. Who are the people who come here and make a success of life and maybe inverting, those who donât?
I think thereâs a long history of entrepreneurial spirit in South Africa and I think that entrepreneurial approach to things does very well here. What I see a lot of is technology, finance, private equity type entrepreneurs coming over here. Usually theyâre very educated and have thought things through. Theyâve done their research and they come over maybe before the family. Start building economic links here, and business links and then they do just fine. Other types of emigrants or people coming across from South Africa, people who are retired for example. Thatâs a whole different ballgame. Thatâs a lot more difficult.
Coming here later in life because youâre gatvol with maybe whatâs happening in your own country and wanting to get a job here, say 50 plus. Do you see much of that?
We do see it and itâs quite challenging because one of your biggest entry costs here is property and property is exorbitantly expensive in this country and the properties are a fraction of the size than in South Africa. You often have conversations with the children, who are trying to figure out how to raise a certain amount on a mortgage or buy a bigger property, so they can have an annex for the parents. Itâs a huge lifestyle cost adjustment for everyone involved. Often, in some cases, itâs just not workable. The property that theyâre selling, the home back in South Africa versus the property they can buy here â itâs just such a huge difference and it does change the numbers dramatically.
Do you visit South Africa often?
Iâm out there every two or so months to see clients. I usually spend a couple of days in Johannesburg and a couple of days in Cape Town, in our office there.
Do you get or have you seen an increase in the demand for your services, in particular an increase in the number of people who want to either move money away from South Africa into the UK or themselves?
Yes, what Iâm seeing is weâve actually got a license in South Africa now, so weâre a dual regulated financial planner, and we put ourselves forward as well positioned to handle that transition, between South Africa and the UK, whether youâre staying in South Africa and internationalising assets, or whether youâre going to move yourself across at some point. It’s very important the transition is done right, from a tax point of view as well as from an investment point of view. What weâre finding is the clients we see in South Africa donât only want to work with South African based professionals. Theyâve got a much, more international outlook and they feel more comfortable working with a firm thatâs got an international footprint. We found that dual licensing is very attractive.
Yes, and you do have that footprint.
Yes.
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Reg, just getting back to the story of Sable and as it is today. After starting First Contact and building from the ground upwards. You made the deal with Sable Private Wealth in 2004, and youâve now got quite a few services within your business. Have you moved outside of London?
Yes, so I suppose one of the business reasons why we engaged with Sable Private Wealth Management, as it was called then, was many of our First Contact clients were staying in London. They moved into the city and now they were starting to earn a lot of money. They were getting bonuses and they wanted to buy properties and they needed mortgages. The type of services that First Contact offered then and actually still do are for those young, working holiday travellers coming over, so we felt we were losing them. Every time we tried to engage with those clients and to try and offer a slightly more professional service, they still saw us as the young backpacker company. We realised that we were missing a trick there. I got introduced to the two founders of Sable. I had a really, good conversation with them and realised that here was an opportunity to keep in touch with and keep offering services to clients as they move through their own career here in the UK. We bought into their business and over the last four or five years weâve merged fully with them. Actually, Sable really now offers all the services that First Contact used to offer, but they pitched it at a slightly different, slightly more discerning, more mass affluent client base, and I think weâre doing quite well at doing that.
How big are you? Just give us some of your numbers â how many people work here? How many clients have you got, assets under management, that kind of thing?
Okay, weâve got about 180 staff, so weâve got about 50 to 60 staff here, in the UK, in our two offices. Weâve got a really big office down in Cape Town of just over 100 staff. They do almost all of our back office work but increasingly we are finding that weâre actually sourcing clients now out of South Africa, so thatâs a very useful way to do that. Our revenues are about nine to ten million Pounds, so that sort of gives you a sense of how big we are.
Youâve made mention of an opportunity that South Africans would love in Portugal.
Thereâs a number of programs in Portugal that are on offer right now. One of them is the âgolden visa programâ where people donât have to go to Portugal and they can, with half a million Euros buy property and they can get the residency. Thatâs very attractive to people whoâve got businesses in South Africa and they want to stay there and they havenât decided to move just yet but they need that Plan B in place. Thereâs another program, which is where people are actually willing to leave South Africa and they are looking to migrate somewhere and the UK might look expensive, so they might be at the end of their working life, or theyâve just got a business thatâs producing cash flow but theyâre not that involved in it anymore and thatâs where the non-habitual residence program in Portugal plays an important part because you can actually move to Portugal, become a tax resident there, but also get a ten year tax break on all your income. Portugal doesnât have an inheritance tax regime right now, so that means that youâre able to avoid the Estate Duty issues for your South African assets. You can fully migrate there. Get a massive tax break and if thereâs family in the UK, youâre very close to them. Youâre a very cheap flight across from the UK and youâre living in a place thatâs got sun most of the year. In the scenarios that Iâve looked at, where people have considered… the kids are living in London or London-surrounds and theyâve come and looked at property prices and theyâve realised that they canât afford property at that level, then they start looking further afield. Once you get far enough a field in the UK, youâre a five or six-hour drive away anyway, so door-to-door youâd actually be closer in Portugal, and youâd be living in a climate thatâs a lot closer to what theyâre used to in South Africa and getting a tax break. With inheritance tax at 40 percent in the UK that concerns people.
Solutions like Golden Visa Portugal make it easier than ever to move to Portugal and potentially gain EU nationality https://t.co/ecWfMJAb5S
— Sable International (@Sable_Intl) June 12, 2016
How popular has it been?
Well this program, the non-habitual residence program is very popular for the Northern Scandinavian countries, where they can enjoy their pension benefits in Portugal and get that ten-year tax break on all of that. Itâs actually quite popular for Americans and the offer from the Portuguese Government is literally that the economy has experienced such deflation that they need that discretionary spending on the ground, so this program we think is there to stay and its part of an overall recovery program that theyâre trying to put in place in Portugal.
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Reg, you meet a lot of South Africans newly arrived. Iâd like to just get a sense of the mood, both from those that come here and those that are engaging with you, thinking about coming to the UK.
In terms of what they think of South Africa or what they think of here?
Pretty much the mood, why would they be leaving South Africa at this point, perhaps not five or ten years earlier?
Well, I actually visit South Africa regularly and I think itâs fair to say that for the last 15 or 20 years Iâve been teased by all my friends and family there, what am I doing here, on mud island, and itâs cold and miserable. Iâve definitely gained a sense over the last couple of years that the mood amongst South Africans and amongst my friends there that theyâre a lot more understanding of why Iâm in the UK, even to the point of being slightly envious because they will sidle up to me now and theyâll ask me what sort of prospects do my kids have, perhaps going to university in the UK or what are those job opportunities for them, which I find quite surprising because for many years theyâve been saying how wonderful it is there. I think that theyâre seeing a lot more risk and a lot more volatility in the economy and politically, and I think those are big drivers and quite a big push for them to leave South Africa.
RW Johnson wrote a book asking how long South Africa will survive. Itâs been a bestseller and anybody whose read that book would, no doubt has been thinking twice about their futures. Do you, when you engage with people who are considering perhaps relocating, does a book like that even come into their consciousness?
Itâs interesting that you mention that book. I actually happened to have read that book. I think itâs an outstanding book and when I did read it I insisted that all my managers did. Mike, I know that youâve read it. Simply because it gives a far deeper, greater understanding of the South African context, Iâve got some managers here who are Aussies and Brits. I think it is very important for them to understand, certainly from our perspective as a business, the opportunity to be engaging with South Africans, who may need our services. Yes, I think sadly, I think that there is this opportunity for us to be looking towards South Africa and South Africans and to present our services and solutions, which is a slightly bitter sweet thing. Iâm a very proud South African and I dearly love the place but more and more so, Iâm encountering people who are far more interested in our services than perhaps they were two or three years ago.
Could you give us an understanding of how much that has changed in the last two years, if you could put a percentage to it?
Itâs actually quite difficult to put an actual number on it. I just know that each one of our businesses have experienced growth, particularly in the South Africa corridor, so if I think of our immigration business weâve had a whole bunch more enquiries for people who have a British spouse. Now, itâs not an easy thing to get but the spousal visa is a route into the country and weâve been inundated with those enquiries. Things like that take some time to plan. People donât just jump on a plane and come over here. Itâs a yearlong process, or sometimes a two or three yearlong process. They still want their kids to be educated in South Africa, or certainly schooled there but thereâs definitely a growing demand for our services in South Africa.
We know that on the 9th December when Nenegate happened, as we call it, when the Finance Minister Nhlanhla Nene was fired, an unknown was appointed to his position, and the Rand took a pasting. The Bonds fell out of bed. We know that there was a big shock to the Rand and to confidence in South Africa. Was there a discernible difference, pre and post Nenegate?
Yes, absolutely. For quite a long period of time the Rand was fluctuating at around 18:1 and on that Monday, following that news, the Rand shot up to 24:1. Our Forex team was inundated with transfers out of South Africa, which we found quite ironic. The clients in South Africa who werenât transferring it at 18:1 but they were panicking and doing it in sways of money at 24:1, so there was a vivid example of almost instantaneously the sort of effect on our business and really on money flows out of South Africa that we saw almost immediately.
From your perspective Mike, and you deal much, more closely I guess, with the wealth management side, are you seeing the demand rising exponentially, post Nenegate?
Weâve seen it, because investments and long-term investments are things that people think about a little bit of time before they do it, unlike an FX trade, where they might feel the need to action it quite quickly. Weâve just seen a steady increase in the demand, right through 2015, and it is gently accelerating now, the steady increase in people looking to externalise their assets, whatever investment assets they have. Weâve also seen a lot of South Africans based in London even prior to Nenegate, that have helped people get to that point where theyâve made the decision that they need to sell all their assets in South Africa and move them out. That includes moving old RAs and pensions and the like out of South Africa, and bringing them across to the UK. I think itâs just been building. Nenegate was significant from an FX point of view but in terms of the interest in off-shoring oneâs assets â thatâs been building steadily over the past 18 months.
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Just to pick up on something that Reg was talking about, when the Rand was 18 to the Pound, you didnât have that much demand â at 22 you were inundated. Are you seeing any flow backwards? Are you seeing any South Africans who are your clients, based in the UK, taking advantage of the weaker Rand and taking money back into, perhaps buying property in the old homeland?
I havenât seen that and, no doubt, there must be a couple of those transactions happening. We were generally advising that, and property is a long-term asset, so youâve got to hold that for some time and you probably wouldnât buy property in a country youâve got concerns about in the long term. I havenât seen any of those types of transactions and we would probably advise that people be quite careful of trying to time a currency with such a long term asset but Iâve no doubt thereâs a couple who must have tried.
Has the outflow or the demand to get money out of South Africa ever been this high?
I would say it probably hasnât been this high on a retail level. When you look at total FX flows and demand, which was reflected in the exchange rate, it is often clouded by foreign direct investment and corporate flows and those types of things, so we get a feel for whatâs happening on the retail side. It does feel like the demand on the retail side is very high right now. South Africans naturally do get to points where they pontificate and panic and wonder whether theyâre trading at the right level, so what we try to do is put a risk mitigation plan in place, and go if this makes sense in the long term, trade over a number of periods. Try and average out your rate that you get but, by all means, donât sit on the money and wait for it to hit 26, and then do another panic trade.
You mentioned earlier Reg that you like rugby and you support the Springboks and I see from your website that youâve got an involvement there with the South African Rugby Legends. Whatâs that about?
Yes, this is quite a recent thing and I went over to Portugal, to Lisbon, to join the Springbok Legends there. They played one game and I think the Legends these days donât like to play more than one game.
The Springbok Legends have been on tour to Portugal. It was a trip to remember https://t.co/hIePUIPEGx pic.twitter.com/3zBSY9prme
— Rugby World (@Rugbyworldmag) June 7, 2016
Who are these guys? Who are the Legends and what age group?
Alec, generally they have played for the Springboks, although one or two players would have played provincial rugby but theyâve probably been retired for maybe two to five years, so look these guys are big. I was actually staggered by how big these guys are and how strong they are. Theyâve got four arms like my thigh. They really are huge fellows. Now, of course, Danie Gerber was there and he was probably the oldest of the Legends there and I know that he came on for the last ten minutes, and in fact scored a try. They played against the national Portuguese team, so actually reasonably good quality rugby, but itâs actually a wonderful concept. These guys go around the world. They engage with schools. They do coaching clinics for the kids and itâs… Look, thereâs just such value in that brand and people love being around the Springboks and the kids were just getting autographs and were just in awe of these huge legends, because they are actually legends. Itâs such a wonderful concept and we were delighted to be a part of that.
There is an election just around the corner in South Africa, in August, the metropolitan elections. Whatâs the best possible outcome, when you think of it from a South African perspective?
Now weâre delving into politics and I always have to be a bit careful. My father was actually a Member of Parliament for about 15 to 20 years, back in the day.
For the National Party?
No Alec, for what was originally the old United Party and then the Progressives, and then the old PFP I think, and I think he quit at the time that they rebranded to be the DP then. Well, look I actually think that the great irony is actually the ANC is now really a big threat in South Africa, in terms of its prospects. Look, I think the danger of having a one party State is a very bad thing, so to the extent that their support erodes I think that that can only be a good thing for the country. Look, of course Iâm a DA supporter, so I would obviously like to see them increase their vote. I think what theyâve done in Cape Town and the Western Cape is a very good thing. Itâs a very well run Province and I think if that could be extended to other cities and perhaps other Provinces, I think that would be a good thing.
Competitive politics indeed, well weâve been talking to Reg Bamford, whoâs the chief executive of the Sable Group and fellow director Mike Abbott.