Scaled businesses with believable self-help narratives, where expectations of margin expansion yield earnings growth, with the latter expected to drive a valuation re-rating.<\/li>\n<\/ul>\n\n\n\nTo these, he adds a third bucket of interest to create a powerful trifecta for value creation: where perceived strong management teams are focused on transformational M&A.<\/p>\n\n\n\n
\u201cAgain, with the macro-outlook depressed, it remains a \u2018show me\u2019 story. There is merit to this opinion though, as M&A bankers still view the valuation expectation gap between buyers and sellers of assets as inhibitive for the bulk of transactions coming across corporate desks. This is especially the case when added to international investor perceptions about competition regulation as a business enabler,\u201d he explains. <\/p>\n\n\n\n
Geldenhuys notes that what binds all three of these narratives is the ability to grow in a no-growth environment. Investor focus, when viewed through this lens, is to narrow down on a select group of potential winners, ascribing a reasonable probability to success despite the macro situation.<\/p>\n\n\n\n
\u201cIt\u2019s clear that the age-old, value-based building blocks of an investment decision are back in favour with international investors again: only the best management teams; ensure the quality of the moat around the business; ensure the investment case is easy enough to explain to the internal investment committee; and it is often better not to lose money in emerging markets than to make money, so ensure the risk-adjusted returns have ample room for safety, especially post events in Russia, Ukraine, Turkey and China.\u201d<\/p>\n\n\n\n
Geldenhuys makes the point that, measured against this demanding set of criteria, South African management teams are still highly regarded, and that certain business models are highly prized on an international stage.<\/p>\n\n\n\n
\u201cThe global rate cycle might have made South African companies more attractive than last year, despite the deterioration of local investment climate,\u201d says Geldenhuys. \u201cHowever, as an investment destination, we seem firmly back on the opportunity radar, without the burden of expectation of any positive shift in local fortunes.\u201d<\/p>\n\n\n\n
Further, where investors are pricing South Africa\u2019s trajectory relative to alternatives, Geldenhuys says any optimistically biased investor, corporate, or investment bank will be looking forward to any sustained shift in sentiment.<\/p>\n\n\n\n
\u201cWhen combined with the quality and resilience of our corporates, such a shift implies we could be back to long-forgotten equity return trajectories. Now we are just left with the simple matter of assigning a probability to that outcome, and from our vantage point, without constructive policy reform, it is best to remain selective in our optimism, as will international investors.\u201d<\/p>\n\n\n\n
Returning to the conference, Geldenhuys says the quality of the interactions and the knowledge shared are testaments to the work of Investec\u2019s London and New York-based equity sales professionals who ensure the South African investment cases resonate with the appropriate investment manager styles.<\/p>\n\n\n\n
\u201cWith over 70 years of combined South African equities sales experience, our team has assisted many corporates to drive valuation ratings and broaden shareholder registers over the years, demonstrating Investec\u2019s commitment to our corporate clients locally and in their international ambitions,\u201d adds Geldenhuys. \u201cWe also host about 40 international corporate roadshows annually, and together these events provide the equity advisory team with a unique outside-in perspective of our clients.\u201d <\/p>\n\n\n\n
Investec also recently acquired a majority interest in Capitalmind Investec, a leading European advisory firm, while Investec\u2019s positioning is also bolstered by a significant, on-the-ground presence in London and partners in the US and Australia, alongside Investec\u2019s presence in India.<\/p>\n\n\n\n
\u201cThis matches our corporate clients\u2019 international expansion ambitions,\u201d he notes.<\/p>\n\n\n\n
Investec Bank Limited Disclaimer<\/a><\/em><\/strong><\/p>\n\n\n\n
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