Magda Wierzycka on humble beginnings, inspiring career, venture capital plans #BestofBizNews

There’s no doubt that Sygnia founder Magda Wierzycka is an inspiring woman who has set the precedent for excellence in South Africa’s investment sector. Although she is probably the wealthiest self-made woman in the country, it is her commitment to anti-corruption activism that has cemented her as a formidable force to be reckoned with. In a 30-minute interview with BizNews founder Alec Hogg, she shares her life story, career success and peppers this with valuable insights into her social projects – Bernice Maune

Our guest in this episode is Magda Wierzycka, a visionary financial services entrepreneur whose story is an inspiration for all. Born in Poland, when that country was a vassel to the Soviet Union and the communist system promoted brawn over brains, her twice specialised medical doctor parents chose their route out of that poverty through an Austrian refugee camp, finally settling in Pretoria with nothing but their skills. Like other guests on this show, Magda was selected on the basis that if her story were captured in book form, it would likely be a bestseller. So eavesdrop for the next half hour, and I’ve no doubt you’ll learn a lot about this successful entrepreneur with a powerful passion for her adopted country. 

Really good to talk to you again. We’ve spoken many times over the years and often when you were in situations that were quite interesting. I remember in 2018 when we were together in London, you’d come out strongly against anti-corruption, against the Guptas. Things were pretty hairy for you back then. Have they settled now? 

Yes, indeed. Things have settled considerably. I think then, you know, it was still the kind of hangover from the Jacob Zuma days when I was placed under eagle surveillance, when I had people following me. My phone was tapped, too. But all this craziness has stopped. The one thing that always existed, though, which I really value was that freedom of expression, freedom of speech. No one ever tried to muzzle me except for intimidation. I’ve never been a good member of a club.

But it’s lovely that you have that – what a boss of mine once called, ‘F-you money’. It gives you independence. You’re not bowing down to anybody. You can speak your mind. And my goodness, Magda. I won’t go into the details, but I know the role that you played in this transition away from a corrupt society to the society that we are now going into. And that independence certainly played a huge part in it. 

I am very, very fortunate in many ways because obviously I came from nothing. No one ever gave me anything. I don’t owe anyone anything, you know. There was no capital behind me. No one ever funded me. Sygnia started with six people in the room funded by my mortgage bond. And I’ve never done business with government. I don’t know what PIC offices are. I’ve never pitched for it. I have no government clients and consequently, I actually like it that way. You know, I don’t like belonging to organisations who are collective, I prefer to represent my own views and opinions.

And yes, I have been incredibly fortunate that Sygnia has been a success and a financial success, which has given me a level of financial independence, although my bankers might disagree. But you know, it has given me that independence to voice my views. My opinions stand for what I think is right, even if, you know some of it in 2017 might have put me through a lot. I probably didn’t appreciate the risks at that time. I recognise the privileged position I’m in. I don’t take it for granted. You know what is right is not necessarily you know, sometimes it is obviously a matter of perception. But I will always stand up for investors and for people who commit money to Sygnia. I will always stand up for Africa. And, you know, some of my views might seem controversial on the surface, but I wouldn’t assume that everything that you see in public domain is necessarily everything that I’m involved in.

Behind the scenes, indeed, the Polish community in South Africa, small as they are, have you as a great icon. And that’s because you were born in a place that I went and read a little about where the Second World War actually started because Hitler and his thugs instigated an incident. I’m sure you know all about that story. It’ll come better from you. 

Hitler instigated the incident in a town I was born in, in Glebe. There was a radio station. And, you know, he kind of manufactured the situation in a way in order to pretend that Poland attacked Germany and not Germany attacked Poland. He attacked the radio station dressed the Polish dead bodies in the uniforms of German soldiers. And then that supposedly gave him the excuse to invade Poland.

So I was actually born in that town and grew up there. I actually had that conversation with my husband last night of taking him to see my background. Up until the age of twelve, you know, we escaped communist regime and lived in a  refugee camp for eight years. But, you know, Poland was far from being a picnic, we had a family of two parents, two children and a grandmother who could fit into an apartment of 60 to 70 square metres. We didn’t even have enough space in that apartment for a dining room table.

What did you do about mealtimes?

I remember mealtimes as we were all kind of squatting around a small coffee table, and it’s because there was no space for a dining room table. So it was, you know, a humble start. The positive side of it is everybody was in exactly the same position. We didn’t have any rich people.

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And, you know, the educational was incredible. There was an emphasis on sciences and mathematics that was placed and that is what makes me so sad about South Africa. That, you know, I know what it takes to build the foundations of a healthy, prosperous society. And we getting it all wrong. If you look at our education system in South Africa, we should be starting right there.

But what is interesting is your parents, both of them were medical doctors. So you have a family of six in a two-room department, and yet they are extremely well qualified. I guess that was the way communism worked.

You only have to read Animal Farm to know that everyone was equal. My parents were double specialists each. But, you know, they all earned exactly the same money as like less money than a coal miner. And the coal miners were celebrated in a communist system because of the danger they were exposed to.  Medical doctors would not be celebrated because, you know, it was a utility function. Yes, it required a high level of education. But at the end of the day, you weren’t in any kind of danger, you actually had quite a comfortable job. You know, fundamentally, if one had to say no one had a car, a car was a luxury. There was no food in the shops. Everyone cued together for hours to buy things. Everyone lived in teeny tiny apartments. And in fact, you were lucky to get an apartment as a family otherwise families live together. So you didn’t know what you didn’t have.

And then coming to South Africa via a refugee camp in Austria where you spend some time. Once you got here, you were in your early teens, when you arrived in South Africa, did it make you more motivated, perhaps in the same way as one hears that immigrants do make a disproportionate impact on the countries they moved to?

I guess this moment of pandemic, kind of gets you to take these moments of introspection and evaluate your childhood to see things through a different prism. So I have had a little bit of reflective time on my hands. And, you know, I think those years were actually incredibly tough. So we arrived inside Africa. We didn’t speak any English. My parents had to at the age of, you know, early 40s, which means we actually didn’t have enough money to buy a teaspoon.

We had nothing. My father had five hundred dollars in the bank, so they didn’t have a lot of emotional time. Well, any time, for that matter, to deal with the three of us, which basically meant that, you know, we became independent at a very young age. And so I was independent at the age of 12. I was financially independent, completely financially independent of my parents by the age of 18.

So all the decisions which are usually done in a family context. Even a silly decision, as you know, as grade eight. What subjects are you going to study from grade eight to matric? I had to make those choices by myself. There wasn’t just bandwidths to assist me with these kinds of choices. The fact that you know, I had to work, you know, at OK bazaars cold meat counter just to buy some nice clothes. I happened to, like, nice clothes. So it made me very independent.

And obviously, the other driver was the fact that my parents made it very clear that obviously we have no money. There is the family and she will have to help to support the family financially. There is a family in Poland that you will have to help support financially. I grew up with that kind of an expectation which, you know, with hindsight, when you look at a 12, or 13 year old and you say, well, you are being brought up with this knowledge that so much depends on you. It’s a tough childhood. You know, it’s a tough gig. You know, it’s not a linear childhood. And, you know, do I sometimes regret the fact that I didn’t have a very simple kind of childhood. Absolutely.

It is interesting because I’m sure that if you think laterally to South Africa, there are lots of little Magda’s today. Maybe the next generation of entrepreneurs are gonna come from those young women. 

That’s what I actually find so fantastic about South Africa. As I said, you know, it’s not just this covid crisis that has been an unprecedented economic disaster. I think what South Africa has going for it, which other countries don’t. And  we spent a bit of time in the UK.

I can see that, you know, they just don’t have any survival skills in population. Our population has survival skills, we have learned to survive with very little. You know, I don’t expect people to feel sorry for me. You know, I was very fortunate to at least get education as opposed to some of our youngsters who don’t.

But, you know, we’ve got a lot of people adaptable to really tough conditions. I also do believe there are a lot of entrepreneurs.  After I arrived in the U.K I set up a venture capital business in the UK and I’m extending it a bit. That’s what I want to do today, which is come back to South Africa and look at setting up a similar fund, a venture capital fund in South Africa to see where we can support financial entrepreneurship in South Africa, that’s another chapter of my life.

It’s very exciting and it’s also very relevant for where we find ourselves in South Africa right now. But before we talk about that, and that is the sign of the times into the future, your own career, you went to Cape Town, you did actuarial science, which is the toughest of all subjects to do. But somewhere I read that it wasn’t your first choice. So what was your first choice? And had you taken your first choice? How would life have maybe been different? 

My parents were medical doctors. So I wanted to be a medical doctor and my father said it’s a question of a questionable choice. He decided that I needed to go into business without knowing what business was coming from a communist Poland and needed to dissuade me as a 17-year-old from going into medicine. He worked at the first military hospital. And so he took me to the secret ward where all the soldiers coming back from Angola were being kept in isolation and exposed me to the most horrific kind of visuals off of maimed people.

And, you know, it was horrific to persuade me that medicine is not an option and I should be looking at something else. He also had the money to fund my university education. So actuarial science was something that a friend suggested. I had no idea what it was. And maybe because life insurance companies were offering hundred percent bursaries for actuarial science.

So they paid for access to everything. So I signed up to a science setting and I applied for these. But so I was fortunate enough to get one. And then I started studying something I didn’t understand. The only half that I really, truly loved about my investing career was economics. So this is why I discovered this love for economics, in particular macroeconomics, which I has served me very well today. But I was surrounded by much brighter people than me, you know, then I could look left, left and I could look right. I was surrounded by mathematical geniuses and I’m not a maths genius afterwords.

You know, when I started working, I looked around and I went, you know, there’s no way I can pursue an actuarial career. And obviously moved into investments via the route of Coronation Fund Managers, which was then a start-up and then Harvest, Sygnia. But, you know, if I had become a medical doctor, I suspect that very quickly I would have looked at the business aspects of medicine rather than this and said, you treat patients you like to look at the field of medicine right now. And that’s what I’m involved in, in the U.K. with the ethical funds and investing in start-ups Syria, healthcare and life sciences sector. You know, there is so much which actually, you know, having had a medical background, would have been further helpful. So I think I would have drifted naturally to some combination of medicine and business. I would have been, you know, the GP.

And I guess that’s also makes it a little more understandable how you got involved with the Oxford University vaccine at Sygnia. And we got many South Africans now who are invested in what is still the leading vaccine around the world for Covid-19.

I invested in a company called Oxford Sciences Innovation, which is this joint venture between Oxford and the private sector asset managers who approach  Oxford and basically persuaded Oxford that, you know, they are not very good at commercialising the IP that originates out of Oxford.

The site like Oxford being the number one research university in the world, the number one research university in medical sciences. You know, they were very, very bad in comparison to even Cambridge, never mind two US universities in taking that IP and actually turning it into companies and helping their academic staff to turn it into worthwhile companies.

Such it has approached Oxford and offered to set up a company called Oxford Sciences Innovation, inject six hundred million pounds into that company and DexCom, and you will look at all the IP that originates out of Oxford and have an exclusive relationship to commercialise that IP.

Since 2015 there have sprung up 80 different companies. One of them is Braavos, the IP owner of the Oxford Vaccine Project. The shares are very tightly held until some active manages in response to assets moving away from active measures suppressive in the UK, and then gave me an opportunity last year to step in and buy up in bulk some of those shares. And we ended up being an 18,2%. I think shareholder in our side is extensive.

And once we had those shares, you know, I will always say this one thing to look at this rich universe of companies that been involved to the most exciting spheres. You know, some of it to say, I am technology, but a lot of it is sciences. So why not set up funds around that ecosystem would be very successful in raising. I think south of three billion rand has been raised from that effort. Institutional investors, some from retail investors for those investments. I think it’s a great investment opportunity.

It’s an incredible story. But you’ve managed to somehow read the environment with Sygnia, for instance, which has been a massive success story with your share price. You can tell us about that in a moment. But Sygnia is all about passive investing and started when you listed in 2015. Passives is a very poor cousin to active investing. And today that has completely swung. What gave you the understanding with it as simple as saying, well, it’s happened elsewhere in the world, it has to happen in Africa?

I managed my very first index-tracking fund in 1992 when working for Southern Life. So when I had my bursary from Southern, that doesn’t exist anymore. It was taken over by Momentum Select Insurance Company and that’s where I got my bursary.

So I had to work fast after I had finished university. Obviously, within a few months I discovered actuarial science was not my thing and managed to wiggle my way into the investments division and they didn’t know what to do with me. The investment active side was failing, though. It was losing assets. Someone somewhere heard about this concept of index strength and they knew that it had to do with maths, it needed some maths.

They said you’re an actuary. We’re going to send you to Los Angeles and you need to come back with the skills to manage the index tracking fund and some software for us to do it. I flew across the world. I think it was my first international trip outside of South Africa. And then there was a company in the US which kind of collaborated with us.

And I brought those skills back to set it for us, launched the first equity and bond index tracking fund. And then I left. I worked for Alexander Forbes as an investment consultant before moving to Coronation. And then, you know, we’re talking eleven years of my career. I worked in active-passive management, but with the background and nothing that I saw in the active space made me believe and I’m very sorry and I’m quite sure I’m just about to make a whole lot more enemies than I’ve had to date.

But nothing that I have seen in active asset management space makes me believe that anyone managing money on a daily basis is pretty special. Brighter than average men in the street are able to make better investment decisions. When I look at it, it seems, you know, very elaborate.

Everyone has elaborate investment process, elaborate investment process to select shares to try and outperform, nothing in the process led me to believe that there is any value. I still completely believe in my heart of hearts that decision making is completely random and it’s a 50 50 chance if their shares will go up one day. It will go down whether you will outperform or whether you will underperform. So I had the opportunity to start my own company and thank you, Sygnia with six people in the room no capital backers because I said, guys, we need to go back to the drawing board and say, what do we truly believe? So we started our offering in 2006. I was commercial about it. I knew that institutional investors in particular in retail, were not ready for a fall classic investing.

So we started offering products which were a mixture of 50 percent and then edging coronation out to green investing to make you feel better with expanding more and more and more and more towards the passive side. And when you look at that tenure performance, track record of passive products outperform all active asset managers. Hands down. I’ve always been a believer and obviously I’ve watched what has happened in the US with more than 50 percent of savings to some initial basis. UK is in the same boat and South Africa is starting to follow.

We still in early stages of it. But I think people are starting to realise that there is no reason to pay astronomical fees.

Make the decision to list on the stock market in 2015, October 2015, the share price hasn’t done a lot. Recently, it’s doubled in the last few months. Which is which I’m sure it pleases you, but it’s still very much where it was in 2015. Was it? Looking back with hindsight, was it a good call? 

I wanted to buy a business called DB X-trackers. It was a bank index tracking business. They would only sell that business to list it. Consequently, we listed in order to acquire a business. We listed at exactly the wrong time. If one just talks about listings, because we listed at the top of the kind of small-cap mania and since then the JSE has just gone one way and it’s not been up. It’s been down.

You know, we also very, very thinly traded. So, you know, we’ve got what’s called a free float of, I think, 22%. But even within the 23% big chunks are held by investors who are not trading the shares. So the share trades 100 shares a day. You know, the decision to list to buy the X-trackers acquisition has been very good for us We’ve managed to double those assets under management. It gave us, you know, a different product line and exchange-traded and space. But, you know, if I look at it from the perspective of do we benefit from a listing? No. I mean, there has been no other benefit from being listed.

Did you consider de-listing now that you’d achieved your objective of buying DB X-trackers?

It’s you know, it’s this listing three sort of signals requirement, which makes it very difficult to talk about what your plans might be or what you consider, because the moment you consider anything, then you’re supposed to put a thumb sense and announce it to potential investors. But I certainly have been watching the number of companies that have in the large number of companies that have delisted from the JSE.

And it’s kind of a roundabout way of answering the question. What obviously worries me is the fact that the investable universe of listed companies from the JSE has health, which basically means that for investors, the opportunities to invest in growth assets test track. I think a much bigger problem that we have on the table right now is not prescribed deficits and government bonds, but the dire lack of diversification on the JSE.

And you know what people can invest in terms of, you know, the listed chest space and how narrow that choice is and how it’s not growing. We are not growing that pie. It is actually shrinking? And will continue to shrink as companies delist.

And so to come back to what we were talking about right in the beginning, the intention to come to South Africa, to start helping entrepreneurs to build and presumably at some point in time, that will be a wave of new listings as we get these folk to expand their capital bases as well. 

The idea behind, you know, kind of venture capital funds is that you provide the funding to people with good ideas. I mean, and, you know, they always had differences between things such as, you know, companies originating out of Oxford University, where it’s like sciences and years of research have gone into a particular scene or a particular device that monitors what’s at the heart rhythms and what the method of innovation.

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I mean, there’s a lot more in it and it takes years to come to market. But the other way for innovation is technology driven innovation. So this is people with business models who have to deal with X development, all online sales enhancement experience, all artificial intelligence-driven bots.

So those kind of innovations which take years and years and years, those people might have the good idea. They might not necessarily have the skills to implement that idea, but they hit an idea and provide it. You have a good idea. The capital and the skills to implement that idea can be found. And then those companies can then become job creators. And can mature much, much more quickly than anything in the life sciences space. Hopefully, you know, some of them can come to market in their own right time.

Thank you. Just to close off with this, you recently turned 50. Many people are hitting 50, but it feels. Well, it’s the new 30. So many people have the energy and the enthusiasm and the experience to really start pushing on. Do you feel that to you, that the business world is now going to see an acceleration of Sygnia of Magda Wierzycka?

 You know, let’s assume I’ve been in business now that you’ve disclosed my age, (but it’s on Wikipedia), 26 or 27 years, you know. It has gone in a whirl. I mean, you have to look back. I just can’t believe how quickly those years have passed. But having said that, I am now 50. And, you know, I believe that, look, I’m not ever going to slow down. But now what I do  behind me is, of course, capital. I’ve got experience and expertise.

I’ve gone through tough times. I know what it’s like to start from nothing. You know, it’s not as if I was born with a silver spoon in my mouth. I’ve started numerous businesses. I believe that I can lend expertise. You know, I don’t push into areas of expertise. I’m terrible at playing corporate politics. I know how to help start businesses.

I know how to develop a commercial growth path and a pipeline for new businesses to apply to the kind of both constructive way and hopefully commercial way, which will benefit Sygnia, Sygnia shareholders, serious investors. That’s you know, I’ll finish up maybe with an anecdote. And that is my best friend at university was someone by the name of Roelof Botha who is now the managing partner of Sequoia Capital in the US. He was also one of the founding partners of PayPal and the founding investing (team of) Instagram and YouTube. So he left Africa straight after university to move to the United States and has done great things.

King of Silicon Valley. 

He is making the money. So last year I went to see him and we were driving his car. But he is very intense and says, Magda when we went to university remember we had a pact? So just like me he also came from nothing. His family gave him nothing. And now we are here, 50.

“You know, we always talked about fame, fortune, power, which of these three, given where we are in life. What matters to most? Fame, fortune or power?”

And I said to him, Roelof! Social good.

So you can’t change the rules of the game. We had the game, we played the game. So Roelof says OK, so it’s not fame, fortune, power.

I said Roelof,  I’ve managed to bring the fourth pillar into my equation, and that’s social good.

And if I can marry the four and leverage one against the other –  and use some money I have, use the fact that I do have a voice in the public arena as it appears then you know, if I can marry that with making a positive contribution to any particular society. You know, in South Africa, to the average South African, I’m hoping to do that. And that truly is the ambition for the next six years.

That was Episode five of the Alec Hogg Show, this time featuring financial services, visionary Magda Wierzycka. You can download the link here: The Alec Hogg Show: Meet Magda Wierzycka, an entrepreneurial role model for all South Africans. Ep 5 (or find the interview on BizNews Radio on the BizNews home page). You can also subscribe to The Alec Hogg Show on Spotify here.

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