In Summary
  • Little did it occur to many that the   interests involved setting up a private equity firm, following  in the steps of his peers who had previously  left their plum posts to set up their own private equity companies.

  • Mr Dande left with three senior staff from Britam, with whom he set up Cytonn Investment Management, a property–focused equity fund.

  • The other three were  Patricia Wanjama (formerly head of legal), Shiv Arora (formerly investment analyst)  and Elizabeth Nkuku (formerly  portfolio manager).

Last week, Britam closed the market top of the list of losers, having shed 18.5 per cent of its share price to Sh27.50 a share. Three weeks ago, Britam’s share price had hit Sh40, the highest over the past one year. The change of fortune presents a case of a strategy gone wrong.

On August 31, Britam lost four high profile officials but little was said about their leaving. It’s only on Wednesday when Acorn Group — 25 per cent owned by Britam — announced that it had closed a Sh20 billion deal with Cytton Investment Management.

 In its announcement, Acorn Group unveiled the faces behind Cytton Investment. One of them is Mr Edwin Dande, who was the chief executive officer at Britam’s asset management unit, presiding over a portfolio that currently stands at Sh36.3 billion.

The 38-year old Dande had been at the helm of British-American Asset Managers (BAAM) since 2011.

Mr Dande’s portfolio was no doubt at the heart of Britam’s financial strategy, at least going by the heavy investment the firm was making in property and real estate to reduce reliance on fixed income investments and stocks.

Then came August 31 and it was announced that Mr Dande was leaving Britam to pursue personal interests.

Private equity firm

Little did it occur to many that the   interests involved setting up a private equity firm, following  in the steps of his peers who had previously  left their plum posts to set up their own private equity companies.

Mr Dande left with three senior staff from Britam, with whom he set up Cytonn Investment Management, a property–focused equity fund.

The other three were  Patricia Wanjama (formerly head of legal), Shiv Arora (formerly investment analyst)  and Elizabeth Nkuku (formerly  portfolio manager).

After Britam lost the real estate deal, investors were quick to react with the firm’s share losing 8.5 per cent. Last Friday the shed off 10 per cent of its value.

“Britam stands to lose its grip in the lucrative property market… the decision by Acorn Group to work with Cytonn Investments will see Britam lose deals worth Sh40 billion,” Old Mutual Securities Research said in a note.

Britam is, however, not alone in losing talent to a new crop of young restless people who, having tasted big money, are turning corporates upside down by moving out to set up their own private equity funds to scout for deals.

Private equity is still a relatively new development on the Kenya’s financial scene but it has been growing in recent years as investors chase higher returns from economies enjoying strong growth.

 Mr Dande says Cytonn has set its eyes  on the booming property market in which it seeks to mobilise resources from investors and pump it into strategic real estate projects.

“There is no shortage of capital; the world is awash with capital looking for where it can generate handsome returns,” said Mr Dande. “Private Equity is an opportunity to get access to above-average returns for our investors before they are in the listed markets.”

Rapid developments

Analysts believe that Kenya’s economy presents a great opportunity for money looking for handsome returns due to rapid developments in different sectors.

“There is immense potential for PE funds in the country and I am not amazed at the pace they are growing,” said Mr Eric Munywoki, an Old Mutual analyst.

He attributes the growth to a widening of the gap in financial markets left by commercial banks who have limited their lending to corporates to shield themselves from loan defaults associated with small businesses.

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