Cape Town: finding the financial potential

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 11 April 2008

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Cape Town – typically associated with holidays and Table Mountain as opposed to business. Imtiaaz Hashim, director: corporate finance, BDO Spencer Steward (Cape) Inc, maintains however that the Cape market is not only buoyant, but holds significant business opportunities despite the jittery global economy – provided you know where to look…

With Gauteng the undisputed financial hub of South Africa, the Cape Town market is arguably a more challenging one for financial institutions to take advantage of. For example, over 75% of companies listed on the Alt-x in South Africa are headquartered in Gauteng. As one moves south, the traditional avenues for auditing and accounting firms therefore decrease substantially.

That being said, there are a number of unique business opportunities available in Cape Town if you're prepared to look outside the traditional auditing/accounting sphere. The main sources of these opportunities are derived from the owner-managed companies and high net worth individuals that trade and live in the Mother City.

In terms of owner-managed companies, these are typically well supported by both the local community and buoyant tourism. Hashim believes Cape Town's street layout, its holiday atmosphere and picturesque beauty lend the city to smaller, more personal businesses.

“In a similar way, high net worth individuals also thrive in this environment as there are a number of investment opportunities available in these smaller local businesses. These high net worth individuals aren't just confined to local investors and early retirees, but also include foreign investors who view Cape Town as their gateway into Africa. As such, these are the markets that accounting institutions need to attune themselves to,” he says.

When it comes to facilitating the corporate finance needs of both owner-managed companies and high net worth individuals, it's all about adding real value. One of the key challenges that's even more acutely felt in Cape Town is that of high cost sensitivity. Accounting firms need to move beyond “perceived value” to actual value add. They also have to make their services that much more personal – and treat these clients as the important source of business they are. Your team is thus crucial. It needs to be both personable and passionate and, in this way, in touch with the very real needs of your clients. In this way, you'll be able to tap into and meet these needs and find other opportunities to add value.

“Never has this non-traditional approach been more important in the Cape Town market,” says Hashim.

“What we're seeing at the moment is that the current local and international economic instability is creating unique business opportunities in the province.” With interest rates, fuel prices and inflation increasing in South Africa, businesses are finding it more difficult to replicate the buoyant results of the last few years. This has resulted in foreign investors looking to South Africa to invest as the interest rates and current exchange rates make our country an exciting prospect.

“We have been recently and are currently involved in due diligence assignments for foreign investors looking at buying controlling stakes in local owner managed companies. This is supported by the fact that owner-managed companies that are struggling to make ends meet are approaching organisations like our own for valuations and due diligence so that these businesses can be put on the market. At the same time, we're dealing with increasing volumes of enquiries from high net worth individuals regarding suitable investment opportunities. It's thus a case of now marrying the supply with the demand – facilitating transferral and thereby cementing the value-add we offer.”

When it comes to auditing and accounting then, Cape Town offers firms the opportunity to reinvent their services and stretch their potential. By tapping into this unique business community in an active way and by consistently striving to add value, auditing and accounting firms will soon discover that a little bit of “out of the box” financial services thinking can go an incredibly long way.

Disclaimer: Please note that this article is at least 12 months old.
Any information herein was accurate when published on 11 April 2008