Im constantly surprised by the number of institutional investors in the world that I simply have never heard of. Many of these are sub-national endowments drawn from natural resources, which are typically used for inter-generational savings and budget stabilization. And heres whats really interesting; some of these funds are big. For example, how many readers have heard of Royal Bafokeng Holdings? Until a few weeks back, Id never come across it. But there it is -- an institutional investor worth $4.5 billion. It even has a lovely annual report that goes into quite a bit of detail on its origins and operations. Its a bit embarrassing actually; Im supposed to be an expert on this stuff! Anyway, heres a really interesting blurb on RBH:
Royal Bafokeng are a nation of some 300,000 Setswana-speaking people, whose home has been located in South Africas mineral rich North West Province since the latter half of the 17th century. The North West Province is the worlds largest known deposit of platinum group metals (PGMs). The discovery of platinum by Hans Merensky in the 1920s precipitated a platinum rush for land by major mining companies. As a result, attempts to strip the Bafokeng of their heritage occurred throughout much of the 20th century. In the 1990s, however, after extensive engagement between the Royal Bafokeng Nation (RBN) and the relevant mining companies, the payment of equitable royalties to the RBN in exchange for the right to mine this valuable land was negotiated. Established to manage and develop the commercial assets of the RBN, Royal Bafokeng Holdings (RBH) was created in 2006, a result of the merger between Royal Bafokeng Resources established in 2002) and Royal Bafokeng Finance (established in 2004). RBH functions as a community-based investment company whose investment activities are aimed at generating the income required for the funding of sustainable projects that will benefit the Bafokeng community. The Royal Bafokeng Development Trust (RBNDT) is RBHs sole shareholder and the formers overarching developmental mission Vision 2020 is financed mainly through dividends and interest income generated by RBH.
To be fair, dear readers, part of the reason you may have never heard of RBH stems from the fact that it is entirely focused on South Africa and, for the most part, operates as a sort of holding company for the various community owned enterprises within the Bafokeng. Notwithstanding, its still quite interesting to hear about its role, responsibilities and strategies and to learn how even the smallest communities are using finance to achieve their objectives. Remarkable.
Anyway, with this in mind, I've decided to make this 'big funds you've never heard of' post a repeating feature of the blog (a bit like the weekend reading or deep thoughts posts I often do). So the BFH is Part 1. And now Im excited to see what pops up into Part 2, 3, 4 etc.