“In this industry you must be passionate in order to survive and at the same time remain inclined to learning new tricks,” these were the words of Group Managing Director of Lexus Securities (Pty) Ltd, Andrew Jansen, yesterday as he narrated the long road Simonis Storm had to walk to get where it is today, describing the starting period as a “tough one”.
Simonis Storm is a subsidiary of Lexus Securities.
As amazing as it sounds, one of Namibia’s biggest stock broking entities is only two decades old, although their presence in the market might make you think they have been around for centuries. Today marks the 20th anniversary after it took its first step in the local finance industry.
When The Patriot visited the Simonis Storm headquarters situated in the posh Klein Windhoek suburb for an interview with Jansen yesterday, things looked rosy as you enter the building. However, a nostalgic narration by Jansen regarding the journey travelled from the firm’s inception in 1996, clearly indicates that it was not an easy one. “It was not easy, especially in 2001 when we became a 100% Namibian owned and managed firm, we had to make do with the little resources we had without any big brother figure,” Jansen remembered vividly as the interview kicked off.
20 years later… Share with us the road Simonis Storm had to walk to get where it is today?
In 1996, the founder of this businesses, formed a joint venture with a company called Fleming Martin in South Africa and they started a business under the name Fleming Martin Securities Namibia. The business was later bought by Jackie Morgan in 1998. In 2001 Morgan disposed of a few of their subsidiaries, which included this business. Basically, in 2001, the business became 100% Namibian owned and managed. In 2002, we took over another stock broking business called Lexus Securities and we basically put the operations all together under the name Simonis Storm You can say that for three quarters of its existence, the business has been 100% Namibian owned and managed – which I think is quite an achievement. One of the things that I think we are particularly proud of is the fact that we developed a lot of in-house capacity and capability, especially around economic and company and financial research and analysis. We have over the years trained a lot of people, we took in a lot of young people and gave them exposure to the financial markets in business, and economic analysis. I think we are quite well-positioned to actually advise in any area that relates to finances.
What are some of the challenges that the company has encountered along the road?
The biggest challenge for us, especially at the beginning, was the fact that we started as a small independently managed company with no big brother that you can fall back on in terms of resources; in terms of financial or human capabilities. Sometimes it’s been a challenge to attract the right skills and to actually maintain them because the business, although it is small, is quite powerful and I think if you talk to most people in our space they will tell you that the best place to gain exposure to the market is to get it in a set up like ours. Because here you can deal with anything from corporate finance, company regulations and then investments. So I think the biggest challenge is that. And a minor challenge to my mind has been to come across as a Namibian business. Even today, if you do a survey – just a quick survey – by calling people and you ask: Simonis Storms Securities, Namibian or South African company? I think 8 out of 10 would say South African. So the challenge is and I think there are a lot of people even higher up in government who think our business is not Namibian and for that reason they also doubt what capabilities there could potentially be. It is a question of its probably marketing, maybe PR and putting ourselves out there. I think one of our biggest challenges as accountants, economists and financial analysts is typically that those kinds of people are less inclined to do marketing and to talk about themselves so we rather do the work and let the work speak for itself. We would typically like to get on with our work and then give our opinions as unbiased as we possibly can and hopefully through our work that would speak for itself. I think we have done phenomenally well in the last 20 years – starting the business from scratch and five years into its existence we were basically left to our own devices because in 2001 we had to start our own back office. We had to start with our own research, client portfolio and client accounting. So coming from having all the support from South Africa and then having to do everything on our own we managed to secure private client assets of almost N$4 billion. Starting from zero 20 years ago and managing four billion dollars that’s one part of the business. But in terms of research, we have got about five CFA candidates, one CFA charter holder and the quality of our research that we put up is well regarded by the market, clients like the bigger institutions. They typically want to know what we think about what’s going to happen in the future, what is going to happen with inflation, what do we think about the government’s finances. From that perspective, starting from nothing and having to do everything on our own, I think we have achieved a lot we can really be proud of that.
What are some of the company’s short-term and long-term goals?
As a group, because Simonis Storm is a 100% subsidiary of a company called Lexus Securities, our vision is to provide a wider range of financial services to clients. We started with some of that and we have our long-term and short-term insurance broking licences as well so we can provide a comprehensive wealth management service to our clients. So, I think we are very excited about that because now we can look after our clients’ short- and long-term insurance and investment needs. We are cautiously looking at other financial products. Lending money to clients is an area where we feel there is an opportunity.
With the current state of the economy, not just in Namibia but all over, how do you think this impacted the local stock broking market?
If you look internationally, we think that with inflation on the rise, interest rates on the rise, generally people have been quite liberal with taking on debt (personal debt); we think that that period of exuberance is coming to an end. I think people need to be a lot more conservative in how they handle their finances, particularly regarding entering into debt. We think that if you bring it back to Namibia, in particular, things like drought, the government’s physical position that is having a huge impact on the finances of the man on the street so there is less disposable income, there’s a little bit less money in circulation because the government is not paying as fast as they used to and some of the projects have been stopped. I think that is just having a general depressing effect on the economy. So, if you take all of that together, let’s say our typical clients would be a farmer with some savings with us or one of the banks or insurance companies and they will typically have to liquidate some of those investments to invest in water infrastructure or feeding of cattle and so on. So, generally that has a negative impact on the amounts of funds that we are looking after or invest on behalf of clients. One thing that we have been warning clients about, for the last 18 months to two years, is the potential negative consequences of having too much debt. We have advised clients against owing money. We feel that given the state of the economy, given the potential rises or hikes in interest rates that it could have dire consequences for people. One specific thing that I can mention is that the property market is a primary example of that, we are seeing a lot of properties on sale, we are seeing vacant properties that we haven’t seen in quite a while and we think that there is a particular risk for developers with their financiers because with the economy heading towards recession and technically we are already in recession, with lots of properties on offer it might turn into a situation where you would have excess supply of vacant properties, which might lead to softer property prices. One thing in particular that I think, as a country, we have maybe underestimated the true impact that the Angolan investor/consumer had on our market. Because the Angola consumers are not doing their retail shopping as much they used to, their numbers have also gone down. They were also very active in the property market, they supported some of these high property prices and with them out of the market you see properties, the higher end properties not moving at all. Despite that our challenge as a country is that there’s 25% of the population living in substandard housing and we need to come up with an innovative solution, which will include funding and the actual product of construction and the end-product to give something to these people that is of a dignified standard.
In terms of growing the industry in which you are operating, what reforms or measures do you think should be taken?
I think the ownership of fund management companies and their operations needs to be more localised. If you look at, for instance, the banking sector in excess of 60% of its ownership or of its profits leaves the country because it’s in the hands of foreigners. In the fund management industry, as a whole, there is but a few truly Namibian fund management companies. I think if we have more activities in the fund management industry taking place locally, it can lead to a bigger industry and it can lead to more interesting and innovative products that will be developed to provide financial solutions for some of our problems, an example is sitting with the job. If we have enough brain power sitting around a table in a room coming up with a plan, which will include the funding of these infrastructure developments, I have no doubt we have the capability of solving any problem in this country.
In your view, what factors are currently threatening the industry in which you operate?
Our biggest threat is industries that attract talent that would, otherwise, have been attracted by our industry including stock broking and fund management. A bright young lady or young man instead of choosing fund management in Namibia or stock broking they look at rewards that they could earn in other fields and they say but its small, the stock exchange, there is not a lot of training taking place, there is not a lot of activities taking place in fund management in Windhoek, so I might as well move to Cape Town where I can find a job easily in this industry and I have some options. Another one is that instead of working in this industry they end up working in banking, which is related but because of the profits that are being made in that specific industry they are able to attract some talent and over the years we have seen good people (bright, talented, passionate about the markets) leave the industry because there isn’t a lot of development and excitement taking place in this industry. Our weak counter then is we keep on taking in young people, we keep on training people. The one thing that we are particularly proud of is there’s four stock brokers in Namibia that are currently training and of the four, three of their managing directors are individuals that have been trained by this business.There are numerous examples of people that over the years have worked in our business; that we have trained; that work in fund management companies; that worked for pension funds; that work for life insurance companies. In fact, there are at least two people that work for the regulator that have been trained by our business. We are very proud that we have been able to contribute to the skills pool and the talent pool in this country. I think that if more people take that view, we can broaden the skills base because our vision has always been to give people that would not have had exposure to this industry, to give them exposure to this industry. Some people come in, they get the exposure, they love it, they stay, they go to competitors, they go to the banks, they find a way into the industry. That is something that you cannot take away from this business. It’s not good for the business because every few years you are sitting with new people that you have to train but you come across so many young talented people that make up a little bit for that.
Looking back, let’s say 10 years, would you say the company is where it ought to be in the Namibian financial market?
Every year we have a strategic planning session where we assess our growth and set new targets. We have a three-year plan that we update annually and at our last strategic planning session this year it was interesting to note that every time we update the plan we are ticking off things that we have achieved. About 10 years ago, we had this dream of owning our own property; we were renting at the time when we said we need to buy our own premises we don’t want to pay rent to someone else and we want something that spoke for our needs and we decided to acquire a property, which is our current [offices]. We were blessed and favoured that we could renovate it nicely and it provides our needs and less than eight years later the property has been fully paid off. If you have a plan and you work towards implementing the plan you will always find that you will have more successes than failures. Thirteen years ago, we didn’t have a research department, we did our planning, and we said we need to appoint a head of research, we need to appoint a few research analysts and a few years later it’s there the head of research, specifically products. A number of years ago, we said that we want a quarterly investment strategy with a model portfolio. We did some planning, we had a few meetings, we put together some models and we were the first stock broker to put out a quarterly investment strategy with a model portfolio for people to look at to invest in us as a potential investment product. Obviously, there are certain plans and dreams that we haven’t achieved but overall we are happy with everything that has achieved over the years. Just in terms of setting your mind, setting your target and having the satisfaction after a year or two to say it’s done, it’s done, it’s done. And then you can move on to new things, new ideas, new products, new things that you want to implement in the business.
Do you have three words that can roll off your tongue when it comes to advising companies or individuals who want to join the industry?
Passion for the market! Unless you have a deep desire to know if Donald Trump won, what’s happening to the commodities prices, what’s happening to interest rates, what’s going to happen to the stock market? If you don’t have that inclination as to what’s happening in the South African presidency how does that impact on the currency exchange rate. If you don’t have that desire, you will struggle in this market. In the morning, you must wake up and find out what happened overnight in Asia and other parts across the world; where did the market close in the US; what were the big moves; what is Apple doing? And when you come to sit in the morning meeting in the office you already know what’s going on. Over the years, we have had numerous people involved in the business. Everyone that was part of the business added value in that season and in that time and we are very grateful and thankful for the people that have come across our past in the last 20 years that is both shareholders and staff and we are particularly grateful and thankful towards our clients that have trusted us over the years.