Alexander Forbes new chief executive to free South African shackles
Rael Gordon has taken over the helm of Alexander Forbes at a crucial point in the broker's development. On 1 January he stepped into the hot seat.
For the six months to 30 September 2002, group revenues were up 31% and profits from the UK were up by 23% to R258m (£18.1m) but the group is hampered by a weak Rand and the constraints of being based in South Africa.
Given that 60% of revenues now come from outside South Africa, it made sense for the group to look into a London listing- but this was all put on ice last year by outgoing chief executive Graeme Kerrigan.
Gordon said: "It's one of the biggest challenges we face over a three to five year horizon," he said.
He ruled out splitting the group, but admitted the possibility of listing a portion of the business in London.
"There's no urgency but these are important strategic initiatives," he said.
"It's very high on the agenda, but the fact that we haven't announced anything shows we haven't found anything to our liking."
The biggest obstacle to the group seeking a UK listing is the exchange controls limiting money flows out of South Africa.
Gordon said he hopes to eventually move to a position where the group makes roughly equal amounts from insurance broking and other financial services, particularly its investment solutions division.
It is currently driving hard into managing pension funds, where it can use experience learned in South Africa, which moved to defined contribution schemes ten years ago.
The move puts broker Alexander Forbes head to head with bigger competitors such as Jardine Lloyd Thompson, which at number five in the Insurance Times
Top 50 Brokers generates about twice Alexander Forbes' brokerage, with £349.7m as compared to £140.5m.
Gordon insisted: "We are big enough to compete.
"We aren't going to put our bigger competitors out of business tomorrow, but we are going to get a share of it and hopefully, a disproportionate share. And that's very meaningful to us.
"We only need a small change in market share to make a significant change to our business."
The other obvious way of building up the UK business is by acquisition, and Gordon said that he expects to see more opportunities coming his way in the run-up to FSA regulation.
Pressure on smaller brokers could also play into his hands as some of the businesses most likely to fit into the group could feel a pressure to sell up.
"FSA regulation will put more pressure on the smaller players and we will probably see more opportunities but we may not go into a buying frenzy.
"It is a question of finding things that will suit our criteria."