Four senior staff of Britam’s asset management business have resigned to establish their own investment firm, dealing the company a blow at a time when the wealth advisory unit’s contribution to the group pre-tax profit has risen to nearly 10 per cent.
The four British-American Asset Managers (BAAM) employees who have left include Edwin Dande who has been the CEO since 2011, Elizabeth Nkuku (portfolio manager), Shiv Arora (investment analyst), and Patricia Wanjama (head of legal).
“We are leaving Britam to pursue our independent entrepreneurial interests,” Mr Dande told the Business Daily in an interview, adding that the team is set to form a private equity firm focusing on sectors such as real estate.
Britam has been left with the task of recruiting a new management team for BAAM, whose assets under management have grown to Sh36.3 billion.
Group chief executive of the Nairobi Securities Exchange (NSE)-listed firm Benson Wairegi announced the appointment of Jude Anyiko—a senior portfolio manager— as the acting CEO of BAAM.
Mr Dande indicated that the departing team expects to launch their start-up by end year, raising funds from high-net-worth individuals and cash-rich institutions such as pension funds.
The four are betting on their contacts, track record and reputation built over the years at Britam and other institutions to attract clients in the growing investment management industry.
Mr Dande said his team has seen BAAM move from sixth position to become the largest fund manager by revenue in three years.
The unit posted a pre-tax profit of Sh244 million last year, compared to Sh115.9 million in 2012, representing a 110 per cent growth rate.
This saw it contribute 7.6 per cent of Britam’s total pre-tax profit of Sh3.1 billion last year.
BAAM’s profit growth was driven by a 29 per cent increase in assets under management to Sh36.3 billion.
Mr Dande said the new firm will focus on the booming real estate market, besides stakes in mid-sized firms through its private equity arm.
“We will be offering investors access to alternative investments like private equity and property development,” he said. The team joins a growing list of professionals in the financial services industry who are quitting employment to set up their own operations.
Former Centum executive David Owino, for instance, left the investment firm last year and formed private equity firm Ascent Capital which raised $50 million (Sh4.4 billion) earlier this year from local pension funds.
Mr Owino was the head of Centum’s private equity business and his new firm is seeking to invest between $1 million (Sh88 million) and $10 million (Sh880 million) in each mid-sized firm.
The start-up PE firms are benefiting from a growing base of investable funds from the foreign and domestic market, chasing yields higher than those available in traditional fixed income and quoted equities.
They are also betting on their ability to deliver higher returns compared to other investment options that find it harder to gain above-average results on larger assets base.
The increase in investable funds from PE firms and development finance institutions (DFIs) have seen acquisitions in Kenya become more expensive compared to other East African markets, according to transaction advisers.
Kenya has emerged a favourite investment destination due to relative political stability, a favourable growth rate, and rising incomes that are fuelling demand for consumer goods and services.