Three ways to grow: Investec, Spear Reit and Vukile Property Fund

The JSE really does have it all. This capital-markets melting pot includes international giants and regional champions. We have diversified conglomerates and companies that focus on doing one thing extremely well. This smorgasbord of business models makes our market interesting.

But all the companies have one thing in common: a desire to grow. Equity investors demand a sensible growth path, with executives who deliver that growth being richly rewarded.

There are many growth strategies, ranging from scaling up existing businesses to expanding into new markets. And for the fortunate few, they can just do more of the same…

The past week (18-22 May 2026) delivered examples of corporate growth strategies across this spectrum.

A landmark shift: Investec

With Investec’s numbers for the year ended March 2026 reflecting rather tepid adjusted operating profit growth of just 3.4% (reported in GBP), Team Zebra needed to show the market that it has some growth tricks up its sleeve if it has any hope of meeting its ambitious targets. For example, return on equity just fell by 30 basis points to 13.6%, yet the company is targeting a significant increase to 16% by 2030.

One of the areas where it will be hitting the accelerator pedal is the private banking business, with a plan to almost double the number of clients across South Africa and the UK.

This is an unusual strategy, as private banking is exclusive by nature. We’ve seen plenty of competition in the banking sector at the value-focused end of the market, but now we are seeing the gloves come off at the top end.

I can confirm from more than a decade of personal experience that Investec’s private banking offering is excellent. Many banks use the words “private banking” in their marketing, but only a few truly deliver that service.

It’s not an easy business to get right. Success means convincing clients to pay a significant premium for what is essentially “just a bank account” such as you can get anywhere else. The key differentiators lie in elements such as 24-hour call centre service, competitive interest rates, rewards programmes, access to travel lounges and the ability to have an intelligent conversation with a private banker about finance options instead of just filling in an online form.

This makes it a tricky model to scale. If you have too many clients, the ability to offer personalised service could be affected. If you have too few, then the economics won’t be lucrative enough. A decision to double the size of the client base runs the risk of diluting the exclusivity and level of service that have made Investec stand out in this market.

One wonders to what extent the progress made by Discovery Bank has forced the significant shift in thinking at Investec.

More of the same: Spear Reit

When it comes to focused strategies, there are few who do it better than Spear Real Estate Investment Trust (Reit). The property fund is interested in one thing and one thing only: property in the Western Cape.

Spear has a reputation for a strong balance sheet, and the loan-to-value ratio had decreased even further in the latest numbers. It was clearly at the point where it needed to pull the trigger on at least one substantial transaction. This was confirmed by management’s guidance, with acquisitions of between R500-million and R1.5-billion in property value being targeted.

The acquisition of 1 Sportica Crescent in Tygervalley for R960-million gets the Spear a long way down the road. It also takes the Reit even further into office property, an asset class that has struggled tremendously in the aftermath of the pandemic.

Spear’s approach is the right one: sticking to premium-grade properties that attract blue-chip tenants. In highly sought-after nodes (such as Tygervalley), these can be solid investments. Lower-grade office properties should be avoided by Reits, with many being converted into other uses such as residential property.

The initial purchase yield of 9.67% for the property is much higher than the dividend yield on Spear’s shares. Simplistically, this makes the deal accretive to shareholders. The market’s willingness to pay up for Spear’s shares gives the management team a mandate to do deals like these all day long.

The risk at Spear is primarily one of overpaying for deals, with ever-increasing competition among capital providers for scarce Western Cape opportunities. The Reit has historically demonstrated capital allocation discipline. For as long as that remains in place, its strategy can be highly lucrative.

Same ideas, new markets: Vukile Property Fund

The JSE is a land of broken dreams when it comes to offshore expansion strategies. Vukile Property Fund is one of the very few exceptions. The company has always been a trailblazer instead of a me-too player, taking South African capital to markets such as Spain and Portugal before it became a more mainstream approach.

Vukile is now putting Italy on the map for South African capital allocators.

Vukile’s fascination with riskier markets in Europe has worked out well for investors in years gone by, as it has locked in hard currency growth at rates that are much better than we’ve seen in markets like the UK.

Institutional investors are more than willing to believe in Vukile’s approach. The company raised R2.8-billion through an accelerated bookbuild process. This is roughly 9% of its market cap, so that’s a great reminder of how effective it can be to use public markets correctly.

The shares were priced at a discount of 4.4% to the 10-day volume-weighted average price. It’s not unusual to see investors demand a discount when supporting a capital raise. There needs to be an incentive relative to buying shares on the open market.

This dynamic is part of why retail investors don’t always do well in a cycle of capital raising by property companies. In an accelerated bookbuild, only institutional investors are offered shares at a discounted price. Retail investors have to hope that the new investment opportunities will be exciting enough to offset the dilution along the way.

If we let history be our guide, we can expect more South African Reits to suddenly discover an interest in Rome. DM