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Evaluate how Mr Ebrahim and his company contribute to the economy of South Africa

Evaluate how Mr Ebrahim and his company contribute to the economy of South Africa

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Evaluate how Mr Ebrahim and his company contribute to the economy of South Africa

'But then I made a huge mistake,' says Ebrahim. 1 believed people who made promises of vast amounts of money that they'd invest in the new business. On the strength of that I made the next mistake: I hired 16 people - six being highly paid CAs.' 'We had no revenue, no assets, an expensive salary bill and a very expensive cost structure - and the losses just kept mounting. To make matters worse, two weeks after getting our first institutional client, markets were hit by the Asian crisis. I know it has since become a sensitive image to use, but it was like a toddler taking his first steps along the beach just when a tsunami hit ... '. 'But we survived – on the foundations of an investment philosophy of no volatility, which, combined with our ethical offering, proved to be a very definite and successful niche.' I fired everybody after realising they were having a ball doing nothing. We started managing the money we did have very strictly, our performance improved, losses disappeared and the company- and each of its operating subsidiaries - has never made a loss again," says Ebrahim. 'After having made every mistake possible, and having learnt very expensive lessons, performance started picking up and we decided to enter the retail market, which provided the breakthrough the company needed. People started coming to us, whereas before we had to call on people trying to convince them to invest R300 a month. Up to 65 per cent of our sales were based on that direct model, which has led to our having the lowest churn ratio in the industry and proving how important personal relationships are in business. We now have 30000 direct retail clients.' The Oasis Crescent Equity Fund, its flagship fund, has been the best performing equity fund since its inception in August 1998: In the fourth quarter of 2018, the fund size was 5.3billion Rand. December 2000 was another landmark for the group, when it registered its first global fund, the Crescent Global Equity Fund. That has since established it as the world's best performing Shariah- compliant equity fund. The retail retirement business was launched in 2002, providing all investors access to Shariah-compliant and ethical retirement savings not previously available. We find that 30per cent of our clientele aren't Muslims,' says Ebrahim. Oasis also launched the first Shariah- compliant prudential unit trust in April 2005 and the first listed Shariah-compliant property fund in November 2005.Ebrahim ascribes the success of the business - Ebrahim received the Champion Award for Asset Management at the 2018 GIFA Awards - to an owner-based culture and adherence to global regulatory and ethical standards. He says the Oasis model is also built on selling a product tailored to what people need and not so much on what they want, a result of building up a personal relationship with a client. Oasis has more than R25 billion of assets under management and employs 140 people in South Africa and Ireland. Through a joint venture in Malaysia, the group has exposure to Singapore, Indonesia and Brunei. The Oasis head office is based in Cape Town. In February 2007, 4 Oasis opened associate offices in Dubai. In that same year, Oasis reached the US$4 billion mark in assets under management. In June 2007, it celebrated its tenth birthday. In February 2008, Oasis opened its office in Dublin to further the growth of its global portfolio-management capabilities. It continues to expand its product range.
Transcribed Image Text:'But then I made a huge mistake,' says Ebrahim. 1 believed people who made promises of vast amounts of money that they'd invest in the new business. On the strength of that I made the next mistake: I hired 16 people - six being highly paid CAs.' 'We had no revenue, no assets, an expensive salary bill and a very expensive cost structure - and the losses just kept mounting. To make matters worse, two weeks after getting our first institutional client, markets were hit by the Asian crisis. I know it has since become a sensitive image to use, but it was like a toddler taking his first steps along the beach just when a tsunami hit ... '. 'But we survived – on the foundations of an investment philosophy of no volatility, which, combined with our ethical offering, proved to be a very definite and successful niche.' I fired everybody after realising they were having a ball doing nothing. We started managing the money we did have very strictly, our performance improved, losses disappeared and the company- and each of its operating subsidiaries - has never made a loss again," says Ebrahim. 'After having made every mistake possible, and having learnt very expensive lessons, performance started picking up and we decided to enter the retail market, which provided the breakthrough the company needed. People started coming to us, whereas before we had to call on people trying to convince them to invest R300 a month. Up to 65 per cent of our sales were based on that direct model, which has led to our having the lowest churn ratio in the industry and proving how important personal relationships are in business. We now have 30000 direct retail clients.' The Oasis Crescent Equity Fund, its flagship fund, has been the best performing equity fund since its inception in August 1998: In the fourth quarter of 2018, the fund size was 5.3billion Rand. December 2000 was another landmark for the group, when it registered its first global fund, the Crescent Global Equity Fund. That has since established it as the world's best performing Shariah- compliant equity fund. The retail retirement business was launched in 2002, providing all investors access to Shariah-compliant and ethical retirement savings not previously available. We find that 30per cent of our clientele aren't Muslims,' says Ebrahim. Oasis also launched the first Shariah- compliant prudential unit trust in April 2005 and the first listed Shariah-compliant property fund in November 2005.Ebrahim ascribes the success of the business - Ebrahim received the Champion Award for Asset Management at the 2018 GIFA Awards - to an owner-based culture and adherence to global regulatory and ethical standards. He says the Oasis model is also built on selling a product tailored to what people need and not so much on what they want, a result of building up a personal relationship with a client. Oasis has more than R25 billion of assets under management and employs 140 people in South Africa and Ireland. Through a joint venture in Malaysia, the group has exposure to Singapore, Indonesia and Brunei. The Oasis head office is based in Cape Town. In February 2007, 4 Oasis opened associate offices in Dubai. In that same year, Oasis reached the US$4 billion mark in assets under management. In June 2007, it celebrated its tenth birthday. In February 2008, Oasis opened its office in Dublin to further the growth of its global portfolio-management capabilities. It continues to expand its product range.
Entrepreneurship in action: Exploiting restrictive rules Buying shares in a company run by one of the finalists in the 2006 World Entrepreneur Awards helped finalist Adam Ismail Ebrahim – CEO and CIO of Oasis Group Holdings – fund his company. 'In 1997 - when I realised that my time as an employee was coming to an end - I sold shares that I had bought in Naspers a year before its listing at R1,45, for R50,' says Ebrahim, whose brothers, Mohamed Shaheen (chairman) and Nazeem (deputy chairman), pooled resources with him to start an investment company. They wanted to provide a particular service not previously offered to Muslims, both in terms of savings and retirement. Muslims have the dilemma that their religious rules prohibit them from benefiting from the proceeds of companies involved in alcohol, tobacco, financial services, entertainment, and pork products as well as companies that are highly leveraged. The use of derivatives is also prohibited. Oasis began with seed capital of R3 million, with a strong focus on developing the niche market of investments that complied with Shariah religious law. It has since grown to be the leader worldwide in Shariah-compliant investments. Both its global funds were rated AA by Standard & Poor's and its Crescent Global Fund received a five-star rating from Morning Star. Ebrahim, who hails from District Six, holds a BSoc (Hons) from UCT. He later studied accounting, completed his articles at Deloitte and was seconded to the firm's London office in September 1986. 'It was an interesting time, with new regulations being implemented in the financial-services sector. On top of first-hand experience of changes in the regulatory environment, I witnessed the stock-market crash the following year,' says Ebrahim, who gained insight into the world of investment while witnessing the contrast between 'absolute euphoria caused by booming market conditions and utter depression' when the tide turned. He returned to South Africa in 1988 and joined Allan Gray as an analyst but was soon promoted to being the partner responsible for training managers. 'Until 1996 things went very well, and I felt that I was living my dream,' says Ebrahim, who later found it 'increasingly difficult' to get motivated by his environment. 'When I resigned to start out on my own, Allan Gray offered to fund my business. However, I felt that it would be inappropriate and that I wouldn't really be independent. I wanted the freedom to paddle my own boat, to follow my own philosophy and target untapped markets with my own resources. Thus, we became competitors after I had eight good years with Allan Gray, gaining confidence and an understanding of the industry.'
Transcribed Image Text:Entrepreneurship in action: Exploiting restrictive rules Buying shares in a company run by one of the finalists in the 2006 World Entrepreneur Awards helped finalist Adam Ismail Ebrahim – CEO and CIO of Oasis Group Holdings – fund his company. 'In 1997 - when I realised that my time as an employee was coming to an end - I sold shares that I had bought in Naspers a year before its listing at R1,45, for R50,' says Ebrahim, whose brothers, Mohamed Shaheen (chairman) and Nazeem (deputy chairman), pooled resources with him to start an investment company. They wanted to provide a particular service not previously offered to Muslims, both in terms of savings and retirement. Muslims have the dilemma that their religious rules prohibit them from benefiting from the proceeds of companies involved in alcohol, tobacco, financial services, entertainment, and pork products as well as companies that are highly leveraged. The use of derivatives is also prohibited. Oasis began with seed capital of R3 million, with a strong focus on developing the niche market of investments that complied with Shariah religious law. It has since grown to be the leader worldwide in Shariah-compliant investments. Both its global funds were rated AA by Standard & Poor's and its Crescent Global Fund received a five-star rating from Morning Star. Ebrahim, who hails from District Six, holds a BSoc (Hons) from UCT. He later studied accounting, completed his articles at Deloitte and was seconded to the firm's London office in September 1986. 'It was an interesting time, with new regulations being implemented in the financial-services sector. On top of first-hand experience of changes in the regulatory environment, I witnessed the stock-market crash the following year,' says Ebrahim, who gained insight into the world of investment while witnessing the contrast between 'absolute euphoria caused by booming market conditions and utter depression' when the tide turned. He returned to South Africa in 1988 and joined Allan Gray as an analyst but was soon promoted to being the partner responsible for training managers. 'Until 1996 things went very well, and I felt that I was living my dream,' says Ebrahim, who later found it 'increasingly difficult' to get motivated by his environment. 'When I resigned to start out on my own, Allan Gray offered to fund my business. However, I felt that it would be inappropriate and that I wouldn't really be independent. I wanted the freedom to paddle my own boat, to follow my own philosophy and target untapped markets with my own resources. Thus, we became competitors after I had eight good years with Allan Gray, gaining confidence and an understanding of the industry.'
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