Venture Capital Investments Boost South Africa’s Momentum Metropolitan

By Nick Hedley

South African financial services group Momentum Metropolitan, which has R709 billion (US$41 billion) in assets under management and administration in its investments business, says early-stage venture capital bets in its home market boosted returns and earnings in the year ending June 30.

At a time when funding for startups is declining in most markets, Africa is bucking the trend. Funding for startups more than doubled to US$3.1 billion in the first six months of the year, according to research firm Africa: The Big Deal.

Momentum Metropolitan, which provides insurance, retirement, investment and other services, said its investment return for the financial year improved by 9% to R1 billion (US$59 million) thanks partly to fair value gains on its venture capital investments and foreign exchange gains on assets held in other markets.

Jeanette Marais, deputy CEO of Momentum Metropolitan and CEO of Momentum Investments, told Markets Group the firm’s investments in early-stage fintech, insurancetech and healthtech companies were valued conservatively, since earnings from these assets are only converted to cash when these assets are realized.

One of the venture capital investments that has grown in value is a healthtech start-up called Kimi, which provides a mobile app that collects data to predict long-term health outcomes.

Meanwhile, assets under management in Momentum Metropolitan’s wealth management unit, Momentum Wealth, increased by 4% to R205 billion (US$12 billion) at the end of the financial year. That business falls under Momentum Investments.

Marais said Momentum Metropolitan’s insurance business was still grappling with elevated mortality claims, despite newer waves of COVID-19 being less severe than before.

Mortality claims were still 20% higher than pre-pandemic levels. This was likely due to COVID-19 fatalities, “long COVID” complications, a decline in preventative healthcare measures at the height of the pandemic, and economic and mental health issues, Marais said.