Consulting actuaries and pension administrators Punter Southall and its financial management arm PSFM are to merge with South Africa’s Gensec International Asset Management in a bid to enter the multi-manager market and offer liability-driven investment management.
Following the deal, Punter’s shareholders will become “significant minority shareholders” in Gensec financial services, a newly-created company that Jonathan Punter, founder of Punter Southall, will head.
Punter specialises in corporate pensions consultancy and administration services whereas Gensec International focuses on a manager of manager approach. The new company will offer three investment services for pension funds- asset liability analysis, a ‘manager of manager’ investment approach and tailored financial product packages.
Kenneth McKelvey, principal at Punter Southall, says there are shortcomings to the traditional, balanced approach to investment management. “While it may enable each pension scheme to invest competently within a traditional asset allocation, the scheme may be holding entirely the wrong mix of assets to meet its liabilities at any given time…our new group will be able to offer the opportunity for schemes to adopt investment strategies which are even more finely tailored to their specific needs and objectives,” he says.
The deal involves considerable changes to ownership and the corporate structures. Punter’s parent company PSigma Group will merge with Gensec International Asset Management, the European arm of Gensec Asset Management, itself part of Sanlam, South Africa’s second largest financial services group.
The new outfit is responding to funds’ increased need for liability-driven investment strategy and asset allocation due to MFR restrictions, rising pension costs and the continuing shift from defined benefit to defined contribution schemes.
Says Jonathan Punter, founder and principal of Punter Southall: “For clients, the deal enables scheme sponsors and trustees to manage investments to reflect liabilities, control the risks in financing their schemes and switch more promptly between managers in the event of actual or potential under-performance”.
Completion of the deal is subject to regulatory approval in South Africa and the UK.