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10XInvestments-CoreShares

10X Investments to buy CoreShares

10X Investments has agreed to a 100% cash purchase of CoreShares, creating 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, CoreShares said in a SENS announcement last week.

The purchase price was not disclosed.

10X Investments chief executive Tobie van Heerden said: “This deal brings together two great South African businesses with a shared investment philosophy and clear alignment around purpose.”

The deal will enable 10X and CoreShares clients, as well as other South African savers and investors, to 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 SENS announcement said.

“We’re very excited about the range of funds and experience the CoreShares team brings to 10X,” said Anton Eser, 10X’s chief investment officer. “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.”

Van Heerden added: “Scale is critical to being competitive in rules-based investing. 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.”

The purchase advances 10X’s evolution into a leading, full-service rules-based investment manager providing a full suite of investment products across the various distribution channels. The deal acknowledges the value-adding role of quality financial advice.

Catering for advisers and direct investors

CoreShares’ established intermediated offering will complement 10X’s direct-to-client business.

Gareth Stobie, the managing director of CoreShares, 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.”

A largely new senior management team, under the leadership of Van Heerden, has set a new course as a full-service asset manager for what was essentially a boutique retirement savings business. Van Heerden said this transaction fast-tracks 10X’s growth plans.

In a joint statement welcoming the deal, the exiting corporate shareholders of CoreShares said they were “proud of the journey and the strong investment franchise built over a relatively short time frame, but also acknowledge the increasing role that scale plays when building a successful passive business”.

The statement added: ‘Accordingly, this transaction is in the best interests of the company and its clients, whilst allowing the exiting parties the ability to focus more on their other primary assets and activities.”

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