British American posts profit, eyes PE investments

British American Investments Company is set to venture into the private equity (PE) business to avoid stock volatility after returning to profitability.

Chief executive Benson Wairegi said the company will provide seed capital and raise funds from other investors to make acquisitions and disposal in the regional market, earning profits and commissions in the process.

The announcement came as British American Investments Company (BAIC) posted a Sh1.6 billion net profit in the six months to June, reversing a net loss of Sh197.6 million in the same period last year.

The strong performance was driven by increased investment income, which rose to Sh2.7 billion from Sh31.8 million.

“We as a company have a strong brand and we believe we can raise substantial funds from international investors to make private equity investments in the region,” Mr Wairegi said.

The PE unit will be housed under the British American Asset Management (BAAM), which manages funds for the company and other investors with a focus on property, equities, and fixed income securities.

BAIC’s move into PE will see it join Transcentury and Centum that have buying and selling stakes in fast-growing companies.

Mr Wairegi said BAAM will also start to actively manage funds to grow earnings from fees and boost returns to investors.

BAAM has been buying stocks, Treasury bills and bonds and holding them for months to years, but this is set to change as the securities will be traded frequently to book numerous short-term profits from capital gains.

Assets managed by BAAM increased to Sh25.7 billion as at June compared to Sh20 billion in December, earning the company Sh159 million in fees in the half year.

BAIC also intends to boost its investments in the booming property market to reduce its reliance on quoted equities that have seen its performance remain volatile in tandem with the performance of the Nairobi Securities Exchange.

It is setting up a Sh10 billion property fund, providing a seed capital of Sh1.5 billion, with other investors injecting more cash. Its share price has remained unchanged at Sh5.85 in the past 12 months.

vjuma@ke.nationmedia.com