From zero to R350 billion within two decades

Sygnia has shown exceptional growth in the past 18 years, with its assets under management and administration skyrocketing to R350.1 billion at the end of its most recent financial year. 

Founded in 2006 by Magda Wierzycka, the company has risen to become one of South Africa’s largest asset managers. 

Wierzycka started her career as a product development and investments actuary at Southern Life in 1993 and then worked as an investment consultant for two years at Alexander Forbes. 

In 1997, she joined Coronation Fund Managers as a director and as its Head of Institutional Business. She left Coronation in 2003 to start IQvest, a fund of hedge funds management company. 

Later that year, after selling IQvest to the African Harvest group, she was appointed to the position of CEO of African Harvest. 

After negotiating the sale of African Harvest Fund Managers to Cadiz Financial Services in 2006, she led the management buy-out of the remainder of the African Harvest group, which resulted in the formation of Sygnia.

Sygnia quickly became renowned for its innovation in a sector long dominated by asset managers with large advisory services funnelling clients to their unit trusts. 

The company focused heavily on index-tracking funds through its Itrix range, which has been complemented by its thematic fund range. 

In Sygnia’s integrated report released on 4 December, CEO Wierzycka said the performance of these funds show clearly that after all fees and costs, index-tracking funds win the game. 

The company’s thematic offering has driven its growth in recent years, attracting new flows from investors looking to access technology and healthcare companies. 

Sygnia is comprised of four business pillars –  asset management (passive and multi-management), institutional administration, umbrella funds offerings, and retail divisions. 

With R350.1 billion in assets under management and administration (AUMA), and with another R70bn in secured assets under administration, Sygnia is poised to exceed R400 billion in AUMA. 

On the institutional side, Sygnia is well-positioned to benefit from institutional market net outflows, Wierzycka said.  

As more stand-alone funds continue to collapse into umbrella funds, the Sygnia Umbrella  Retirement Fund (“SURF”) has seen significant growth in both its assets and the number of participating employers. 

At R17.4 billion (2023: R13.6bn), SURF is the sixth-largest umbrella fund in South Africa. Competing against insurance giants in that space, SURF continues to win new business based on client service, pricing and administration excellence, Wierzycka said. 

The graph below shows Sygnia’s tremendous growth in AUMA since its founding in 2006. 

Wierrzycka served as Sygnia’s CEO from its inception, overseeing remarkable growth as the company’s assets under management soared from R2 billion in 2006 to R238 billion by 2019.

Under Wierzycka’s leadership, Sygnia became South Africa’s second-largest multi-management company. On 14 October 2015, Sygnia was listed on the Johannesburg Stock Exchange, with its share offering being 20 times oversubscribed.

Wierzycka stepped down on 31 May 2021, passing leadership to David Hufton. However, under Hufton’s tenure, the company underperformed. 

Revenue growth and profit margins came under pressure during Hufton’s stint as CEO, with the board eventually bringing Wierzycka back as CEO in May 2023. 

In Wierzycka’s first full year back as CEO, the company performed well, with revenue growing by 12.1% to R946 million. 

Profit after tax also grew strongly, by 15.6% to R347.2 million. This translated into strong headline earnings per share growth of 15.2%. 

The company increased its dividend by 3.3% to 217 cents per share. 

Looking forward, Wierzycka hinted in her CEO’s report at a change in strategy from Sygnia as the company is aware of the need to consolidate assets. 

“We are moving past the era of organic growth to one in which we are open to making strategic acquisitions should suitable opportunities present themselves,” she said. 

Asser managers in South Africa have been consolidating their assets, with the partnership between Sanlam and Ninety One being the largest yet. 

Last year, RMB warned that asset managers with less than R10 billion in AUM are at risk of becoming economically unviable. 

The investment bank expects the number of South African asset managers is expected to shrink over the next five years. 

The trend of consolidation seen in recent years will continue with the industry facing multiple headwinds where size has become vital for survival.

RMB expects the assets of smaller firms to move to larger asset managers looking to grow through acquisitions.