Social responsibility and empowerment

Gryphon Financial Services opened its doors for business in October 1998 with the objective of developing into a broad financial services group. Our decision to commence operations as an independent company was largely based on our confidence in the future of our country.

To contribute to this future, we have always been involved and committed, in various ways, to empowerment. Our track record in this area bears testament to our intention to comply with and exceed all the requirements of the Financial Sector Charter and other applicable legislation. Our unique circumstances, however, require an innovative approach towards sustained economic growth, development and social transformation. Our approach to human resource development, procurement policies, ownership and social investment is outlined below and these initiatives are indicative of our desire to play a significant part in promoting the spirit of empowerment in the South African financial services industry.

Human Resource Development

"Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime."

Objective

This simple, often-quoted saying forms the crux of our approach to human resource development. Our objective is to provide a platform for skills transfer and training. Our small, focused team affords our staff the unique opportunity to obtain well-rounded experience in all facets of the asset management industry, from analysis to portfolio management and business development.

Achievements

Since starting our business, we have trained several black investment professionals and support staff members who are today widely regarded as top-notch participants in the asset management industry. Ironically, some of the fiercest competition Gryphon faces today comes from the very people we trained and introduced to the industry.

Outside of the 14 founding members, Gryphon has employed 26 new employees over the period of its existence, 16 of whom were from previously disadvantaged backgrounds.

Gryphon´s two previous Heads of Operations were both black females.

Procurement Policies

Objective

Intellectual capital remains the major input into our business process and, hence, procurement is intimately linked to our approach to human resource development.

We embrace our responsibility to empower previously disadvantaged groups through our procurement processes and our indexation approach permits the allocation of trades to brokers as specified by clients.

Achievements

We channel a sizeable portion of our trading through BEE brokers and "traditional" brokers who have successfully embarked on their own transformation and empowerment processes.

Ownership

Objective

Any shareholding in a business venture transfers to the shareholder the risks and rewards of ownership. Over the course of the past few years, the risks associated with our business have been significant, particularly as the business has been restructured and the business plan re-defined to cope with changed circumstances. Securing the right black empowerment shareholders, under these conditions has proven to be difficult.

Our objective, therefore, is to encourage shareholder participation by black investors through empowerment groups, where there is mutual benefit for both parties and which will proactively contribute to our business. Our alliances must be of such nature that they promote "inclusivity" rather than exclusivity.

Achievements

At inception, Gryphon comprised 14 investment professionals, all of whom were shareholders. At that time, three black investment professionals held 15% of the equity. As additional capital was secured, the share of all investment professionals was reduced to 51% and the share of the black investment professionals consequently declined to 10%.
Over a period of 36 months, more than R1bn in assets was secured by Gryphon Asset Management, the active asset management arm of the group. However after the initial three-year lock-up period on the shareholdings lapsed, a decision by a group of investment professionals, which included the three black members referred to above, resulted in more than 80% of the investment team electing to resign. Since most of the departing shareholders were leaving for positions at competing asset managers, the Group was compelled to buy-back their shares at a cost of more than R6m. The business was subsequently restructured to cope with the reduced level of capital available and the smaller team of investment professionals that remained.

During this period, Gryphon was also instrumental in establishing the South Capital Joint Venture in which the company provided vital financial skills, while our BEE joint venture partner contributed valuable networking opportunities. The project lasted from 1999 to 2001 and generated revenue of R1.5bn. It also significantly enhanced the growth and development of the BEE partner company and proved particularly lucrative for them. Gryphon´s involvement in BEE joint ventures, while not an essential component of our approach to BEE, further demonstrates our commitment to black economic empowerment and economic transformation in South Africa.



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