A sad landmark of 2005 has been the final demise of Sage, one of the top financial services brands in SA for four decades. In 1965 SA's first unit trust, the SA Growth Equity fund (Sage for short) was pioneered by Donald Gordon and Louis Shill within the Liberty Life stable.
By the 1970s the two old friends had parted company and Shill set up Sage as a competitor (albeit much smaller) to Liberty.
Sage's days were numbered after the 2003 failure of its ambitions to set up an (equity-based) variable annuity life business in the US. Sage Life in SA continued to occupy a high-margin niche, but its small scale (with barely 2% of the SA industry) made it difficult to compete with competitors with much larger client bases such as Liberty and Momentum.
With low inflation, there has been increasing pressure on life offices to reduce costs. In May, Momentum made its second offer for Sage. In April 2003 it made a joint bid with Capital Alliance, but Sage's main shareholders - Remgro, Absa and the Mines Pension Fund (along with new shareholder Active Value SA) - decided to give Sage one more chance under new CEO Garth Griffin - who had previously been MD of Old Mutual.
In spite of an expensive rebranding to Sage Financial, Sage found it difficult to trade its way out of trouble, as it still had a substantial overhang of debt from the US venture.
Momentum, and sister companies such as RMB Asset Management and RMB Properties, gets some benefits from Sage. It almost doubles its unit trust assets under management when Sage's funds are added to RMB's. And it can load a further 10% onto its life assets, with only a marginal increase in costs. It can also provide Advantage, its asset management joint venture with m Cubed, with a further R1,5bn in assets.
