Futuregrowth CIO recants: “Had no idea of the unintended consequences.”

It says much about Futuregrowth CIO Andrew Canter’s credibility that his team’s decision to stop lending to six State Owned Enterprises rocked South African markets. But with a single Danish exception, other asset managers didn’t follow his lead, with the immediate response from Futuregrowth’s parent company Old Mutual being to distance itself from the R170bn subsidiary. Today the inevitable happened. Canter told me: “I’m an asset management guy,” he told me, ” I really have no place getting involved in politics – this was never our intention but some interpreted it that way. We had no idea of the unanticipated and unintended consequences. Right now we’d just like things to calm down.” Hence his conciliatory statement below which he hopes will take the heat out of the matter. There has been some upside in all this. Futuregrowth says it wanted to spark a debate on governance at SOEs. The fallout from its announcement certainly triggered that. And then some. – Alec Hogg

From Andrew Canter*

Futuregrowth came to an investment decision that, as fiduciaries for investors’ savings, we could not provide additional finance to some of the largest SOEs without having deeper sight of, and comfort around, their governance, decision-making and independence.

Andrew canter - future Growth
Andrew Canter, CIO at Futuregrowth

Futuregrowth further decided, with internal unanimity and no external discussions, that we should make our views public. While such public airing of investment views is an everyday thing (in print, on-line and on-air) this announcement garnered completely unanticipated attention, as well as a range of unfortunate and possibly damaging misinterpretations. The unintended consequences on others’ has been such that it demands some reflection on our part.

Notwithstanding a range of good reasons for a speedy dissemination of our view, in light of the fallout we must frankly concede that a more measured approach of direct consultation with each SOE, before contemplating public comment, would have been a fairer process. I would like to personally apologise to each of the SOEs concerned, and their respective government Ministers, for my failure to ensure a fair, one-on-one engagement.

The decisions were made by Futuregrowth alone, as an independent, fiduciary asset manager. It is grievous that Old Mutual has been dragged into a debate which they neither knew about, endorsed, nor could practically control. In my view, Old Mutual has shown themselves to be a pro-active and developmentally focused organisation, who has sought to bring about positive change in South Africa.

We are pleased that most of the relevant SOEs have engaged and shown a willingness to have deeper discussions about their governance, decision-making and connectivity to spheres of government. Most of the SOEs, at their own discretion, are taking the lead by engaging with investors quickly and proactively. Futuregrowth is actively continuing our engagement and governance assessment process with the SOEs.

For others who feel aggrieved by our public stance, please accept that our intentions were sound and fiduciary, and the decision was ours alone.

We remain committed to partnership with the SOEs in funding South Africa’s development.

  • Andrew Canter is the Chief Investment Officer of Futuregrowth Asset Management
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