Financial services firm 10X Investments has agreed to a 100% cash purchase of CoreShares, which it says will create a full-service South African indexing investment specialist with more than R31 billion in assets under management.
The deal is subject to regulatory approvals, but no delays are expected.
“This deal brings together two great South African businesses with a shared investment philosophy and clear alignment around purpose.” CoreShares, he said, has a wide product set covering discretionary saving products as well as ETFs, an important growth area for a rules-based investment business,” said 10X Investments CEO, Tobie van Heerden.
This deal would allow 10X and CoreShares clients, as well as other South African savers and investors, access to a wide selection of best-in-class products at the fairest fees possible. It is expected that existing clients at both companies will benefit from the additional scale, expertise and capacity offered by the combined entity.
The teams at the two businesses are complementary with little-to-no crossover. The CoreShares team will join 10X, adding breadth and depth to their team and ensuring continuity for CoreShares clients.
“With this expanded capability we aim to become the leading index provider in the South African market by tapping into proven global trends in the growing use of index funds as a core allocation in portfolios, as well as ESG investing and a greater use of technology-based solutions,” said 10X chief investment officer, Anton Eser.
“Scale is critical to being competitive in rules-based investing,” Van Heerden said. “In the next couple of years, a small number of players in South Africa will have sufficient scale to participate in the market and bring down costs for South African investors.”
He said the team at CoreShares correlates well with the people and the skill-sets 10X was planning to bring in over the next few years. He added that the deal is good news for staff at both businesses since it “combines two great, fast-growing companies and will significantly increase opportunities all round”.
MD at CoreShares, Gareth Stobie, said: “10X has historically not serviced advice channels, but the new management team have wide experience working with advisers. The enlarged company will cater for both advisers and for clients who want to invest directly.”
Van Heerden said this transaction fast-tracks 10X’s growth plans. “10X is not trying to change what CoreShares is doing, but rather to build on it,” he said.