Sasfin Wealth rebrands to Otto1890 after ‘strategic reset’

Sasfin Holdings is repositioning itself around two core businesses – a rebranded investment business, Otto1890, and equipment finance lender Sunlyn.

Speaking at a media roundtable on Monday, Sasfin chief executive Michael Sassoon and wealth division CEO Erol Zeki outlined how the group has reshaped itself after delisting from the JSE at the end of 2024 and winding down most of its banking operations.

Read:
Sasfin set to depart the JSE [Jul 2024]
Sasfin rejects R4.8bn claim from Sars [Feb 2024]
Sars targets Sasfin over dealings with alleged ‘Gold Mafia’ clients [Feb 2024]

An important part of its “strategic reset” is to rebrand its wealth business as Otto1890, the newly named investment management business that traces its origins back to a brokerage founded on the JSE in 1890.

Zeki says the rebrand reflects both the heritage of the business and its evolution from a stockbroking operation into a broader investment specialist.

“Really, what’s happened is that this business goes back to 1890 when Otto Pollak, a member of the JSE, established the business,” he says.

Over time, that operation evolved through mergers and acquisitions before Sasfin acquired the Frankel Pollak business in 1999 and integrated it into its banking group.

During the past 25 years, the division has transformed from a JSE-focused brokerage into a diversified investment management platform serving private clients, corporates and institutions.

Zeki says the wealth business manages and advises on more than R100 billion in assets across local and offshore markets and employs more than 70 investment professionals covering multiple asset classes.

The rebranding process began once it became clear that Sasfin would shift to an investment holding company structure with separate operating businesses.

“Ultimately where we were headed was Sasfin as an investment holding company and that the existing investments – both Sunlyn and what is today Sasfin Wealth – would continue as standalone businesses,” he says.

Rental finance

The second pillar of the group is Sunlyn, the long-standing rental finance operation that provides funding for equipment purchases by businesses, particularly small and medium enterprises (SMEs).

Sassoon says the business has deep roots in the group, dating back to the late 1980s, and has historically been funded through securitisation structures.

“We are rebranding our rental finance business as Sunlyn,” he says. “That brand has been in the market for at least 20 years.”

Read: African Bank seals R3.2bn deal with Sasfin

Sunlyn operates as a non-bank lender and focuses on financing equipment and other productive assets used by businesses. The unit secured about R2 billion in funding last year to support new lending.

Sassoon says the division plays an important role in supporting the SME sector and job creation.

Even during Sasfin’s most active period as a banking group, the wealth and rental finance businesses together accounted for the majority of the group’s income.

“These two businesses represented more than 70% of our income,” Sassoon says.

Exit from banking

The group’s repositioning follows a turbulent period that forced Sasfin to abandon its ambitions as a business and commercial bank.

According to Sassoon, the group was already facing structural pressures common to smaller banks in South Africa before the crisis that ultimately triggered the reset.

“Tier 2 banking has become very, very complicated in South Africa,” he says.

He points to a series of consolidations in the sector, including the sale of Mercantile Bank to Capitec, Grindrod Bank to African Bank, and Bank of Athens to Access Bank.

“Almost all of our peers in the Tier 2 banking space – businesses with equity based on less than R5 billion – are no longer or want to exit the banking sector,” he says.

Sasfin had initially tried to expand its banking operations, investing in digital SME banking platforms and lending businesses.

However, the strategy was disrupted in 2022 after investigations uncovered a criminal syndicate operating in the bank’s foreign exchange unit.

Sassoon says the activity involved only 19 clients and generated about R15 million in income over several years, representing less than 0.5% of the group’s annual revenue.

The matter triggered regulatory investigations, significant fines from the South African Reserve Bank and a R4.8 billion damages claim from the South African Revenue Service (Sars), which alleged negligence by the bank.

Sasfin disputes the allegations and is defending the claims.

Read:
Sasfin fined R210m for ‘historic non-compliance’ [Aug 2024]
Sars hails court ruling as key step in R5.3bn case against Sasfin

The high court recently upheld an exception brought by Sasfin, effectively dismissing Sars’s main claims, according to Sassoon.

However, the group concluded that continuing as a bank was no longer viable. It therefore exited most of its lending activities, converting its loan book into cash and repaying depositors.

“The only way to protect depositors in this instance was to settle them,” Sassoon says. “As of today, we have no depositors left.”

Read: Sasfin apologises for ‘criminal activity’ in its former forex business [Oct 2024]

No plans to relist 

The restructuring culminated in Sasfin delisting from the JSE at the end of 2024 and transforming into an investment holding company.

Sassoon says the group is not currently planning to return to the market.

“I always thought that to be listed you needed a free float of about R2 billion,” he says. “If I were to do that calculation again today, I’d say you probably need a free float of about R5 billion.”

That would imply a market capitalisation of at least R10 billion for a tightly held business – well above Sasfin’s current scale.

For now the focus is firmly on building Otto1890 and Sunlyn as standalone financial services businesses.

“We’ve moved out of this three-year phase fighting this existential threat,” Sassoon says, “and moved into a phase where we’re growing these exceptional businesses.”