In a report last week (8 April 2015), it was stated that Rand Merchant Insurance (RMI) Holdings is looking to expand its portfolio beyond insurance. Justmoney sat down with RMI Holdings’ CEO Herman Bosman to find out more about the plans to diversify.
RMI Holdings
According to its website, “RMI Holdings is a significant investor is some of South Africa’s most prominent insurance groups.”
The company has a 25% stake in Discovery and MMI Holdings, as well as an 83% stake in OUTsurance and a 76% stake in RMB Structured Insurance.
Between these four companies, RMI Holdings is a strong player in the insurance industry. However, Bosman noted that RMI Holdings is still unrepresented in the property and asset management sectors, as well as in the lower-income financial services sector.
However, Bosman stressed that although the company is looking to diversify, any new sectors that RMI Holdings enter will still “focus on financial services.”
Asset management
Bosman stated that the company has already made strides into diversifying its asset management portfolio, thanks to the appointment of Chris Meyer, who will head up that division.
Bosman went on to say that it is vital to have to right people to get ideas off the ground.
Through MMI Holdings, RMI Holdings already has its foot in the door of the asset management sector. However, Bosman believes that the company is under represented and that there is room for expansion. Through this Bosman believes that there is still room for build an independent asset management business within RMI Holdings.
MMI Holdings focuses on distribution asset management, and through its relationship with FirstRand and Ashburton, RMI Holdings also has an interest in product led asset management.
Asset management products
The company is looking at two models to enter into the asset management sector. Firstly, RMI Holdings will “create an in house platform” under the brand, which RMI will appoint teams to run.
The second part of the model will focus on investing in small boutique asset management firms. Bosman noted that these will be operations run by a small group of people that are offering innovative options.
He noted that RMI Holdings is looking to invest in approximately five or six boutique asset management firms, with a stake of between 25% and 40% in each company. However, this will be negotiated with the individual companies.
Disruptive financial technology
Another area of interest for the company is disruptive financial technology. Financial technology, also known as FinTech, is an area of business based on software to provide financial services.
Bosman said that RMI Holdings sees the potential for growth in this sector.
He added that through investing in this, RMI Holdings will gain access to other investments that it may have missed along the way (“the next big trend”) that developed into large and successful ideas.
However, this idea is still in development, as the right entrepreneur for the job has not yet been identified.
The property sector
Bosman noted that not a lot of progress has been made into looking at the property sector as of yet, as RMI Holdings is still looking for the right person to get this idea off the ground.
However, he revealed that the company is potentially looking to buy into an already established property firm, as well as starting its own business.
Investing in entrepreneurs
RMI Holdings has set aside a 500m2 floor space – about three quarters the size of a rugby field, and is still being constructed. This space is set to house entrepreneurs.
Bosman noted that this facility will allow for discussion and an ecosystem where the entrepreneurs can share and develop their various ideas.
According to Bosman, there is not a formal process for approaching RMI Holdings with an idea or business plan. He pointed out that the company has been approached via a variety of means, such as email, telephone or meeting people at trade shows.
Bosman added that a formal business plan isn’t a necessity when approaching the company, as long as you have a good idea that RMI Holdings believes has potential, you can establish the business plan together. However, he noted that established companies can also approach RMI Holdings for a partnership.
Bosman highlighted that RMI Holdings has been approached by approximately seven different people and/or companies with ideas since the Business Day article was published.
First year in the hot seat
Bosman was appointed to the position CEO of RMI Holdings in April 2014. He said that his first year has been “very exciting.”
He highlighted that he already had a strong relationship with the company, having previously worked at Rand Merchant Bank (RMB) for 12 years and being a part of the team that listed Discovery on the Johannesburg Stock Exchange (JSE).
The first year of his position has been occupied with appointing the right investment team (four people have been appointed and started work in July 2014). He added that it was “fulfilling to design the investment mandate,” and that the company’s “underlying investments performed well.”
Innovations
“When businesses meet their potential their growth rate slows. We believe that the trajectory of growth will slow,” stated Bosman.
He explained that this is part of the reason the RMI Holdings is looking to expand into new areas, as these new ventures will have the potential for growth. They will allow RMI Holdings to “build for the future.”
According to Bosman, innovation “is a continuous drive to improve. You can always innovate and improve, there is an innate ability to improve.”
He believes that there is more possibility for innovation than before thanks to the large advancements that have been made in technology and the mobility of people, but that this innovation will most likely come from people outside of large companies.
“Many innovations come from people outside of the companies without the daily burdens of running large companies,” stated Bosman.
However, he revealed that although there are more possibilities for more innovation, there are also several challenges.
Some of these include the increased competitiveness of doing business; people have more access to information, and people are more sophisticated when it comes to making decisions due to the variety of choices and information available to them.
According to Bosman, South Africa is the ideal location for innovative ideas to be developed and tested as there is an “experimental atmosphere in South Africa” thanks to the country’s combination of a sophisticated market on the one hand and a developing market on the other.