Standard Investment Bank CEO James Wangunyu. The firm has taken the lion’s share of new staff it says are top talent. Fredrick Onyango
The quest to get a larger share of foreign trades and institutional investors at the Nairobi Stock Exchange has sparked a vicious talent war among market intermediaries in what could change the pecking order in the investment-banking market.
The wars, mainly targeting research staff and those versed with foreign trades, has been informed by the reduced participation of retail investors at the bourse that has left brokers targeting overseas and high net-worth local investors.
This has seen seasoned market analysts and traders change employees with Standard Investment Bank (SIB), emerging the key beneficiary of the shift in talent with African Alliance being the biggest losers.
On Monday, SIB tapped the services of African Alliance Kenya Securities’ experienced researchers Francis Mwangi and Eric Musau and it also poached Erick Rwenji, formerly head of foreign sales at Sterling Investment Bank.
Renaissance Capital has also grabbed Faida Investment bank foreign dealer Stanley Kariuki as Genghis analyst George Bodo moved to Apex Capital.
Investment bankers said the lateral movements of this key personnel highlights the growing importance of informed and sophisticated investors at the bourse and this come with a heavy cost to the employers who have to pay top dollar to attract talent.
“We hired two good staff because they are the best in the market,” said James Wangunyu, the executive chairman of Standard Investment Bank.
“We have been lacking in foreign sales because we did not have a strong international desk. And for one to have a strong international desk you need a strong research team and this is what we have done.”
Standard Investment Bank has been on an aggressive poaching campaign since last year and their focus on foreign trades is set to pit it against Dyer and Blair, Renaissance Capital and Kestrel Capital that have been strong in this segment of the market.
Kestrel Capital, for instance, which earned the most commissions last year at Sh413 million or 24 per cent of the industry’s Sh1.7 billion, helped by its foreign desk.
This is the second time African Alliance’s talent pool has been raided after Faida Investment Bank took five traders and former executive Lucas Otieno in April this year.
Top notch research capacity is a key marketing tool for the brokers to engage the more sophisticated investors searching for good returns from the equities and bonds markets.
Interest in foreign investors and high net-worth investors is driven by reduced participation of retail investors who tend to be discouraged by a bourse where prices are either dropping or static.
Data from the NSE shows that only six of the 52 stocks have managed to post positive returns in the past 6 months. The NSE-20-Share index has dropped from 4, 495 at the start of the year to the current level of 3, 962.
The rising cost of living due to expensive food and energy has left many small investors with little or no money to spend on stocks—turning the focus of brokers and investment bankers to foreign and international investors.
The Investment banks are optimistic of a rebound hence the investment in talent.
“You do not sow your seed in the rain season,” Mr Wangunyu said. “You sow in the dry season.”
Market insiders say the war for talent and the scarcity of experienced personnel locally has driven up the wages and sign-on bonuses paid to poach staff from competitors.
“There is an unofficial sign-on bonus being offered to the analysts to get them on board,” said an industry player who spoke on conditions of anonymity, adding that the bonuses can be in millions but they do not reflect on the broker’s profit and loss accounts.
“The industry players should be asking; by throwing wads of money to people, can that cash be recouped?” asked Ewart Salins CEO of African Alliance within the east African region.
“Looking at the flipside do you really want to grow people? The millions invested in training and recruiting talent are really not worth it,” added Mr Salins.
