Financial Services provider CPF has invested Sh600 million worth of an undisclosed stake in bond insurer Dhamana Guarantee Company (DGC), as it looks to leverage alternative investments to rival the government in the race for investor funds scouting for returns and security.
CPF is among shareholders of the newly established Kenya-based DGC, an East Africa-focused limited liability company set up by, among others, London-based Private Infrastructure Development Group as the anchor investor and the African Development Bank.
“I see Dhamana Guarantee Fund become the local equivalent of the fixed income securities which the government provides and which have been getting all the uptake from our retirement schemes. We believe that our asset managers are not really needed when it comes to placing funds in government securities. We want to unlock value in alternative assets and Dhamana will give that comfort to investors”, CPF Group Chief Executive Hosea Kili said.
The government has in the recent past crowded the private sector out of the debt market, given the high yields that its perceived risk-free issuances have been fetching.
In February, the 8.5-year tax-free Infrastructure Bond seeking Sh70 billion attracted Sh288.7 billion worth of bids at a coupon of 18.5 percent.
In the period between June 2023 and June 2024, pension funds heightened their appetite for government securities which closed the period accounting for 51.1 percent of the industry’s total Sh1.98 trillion assets under management.
The top management of DGC says it is looking to ride on strong credit ratings and backing from players such as Amsterdam-based fund manager Cardano Development and FSD Africa to woo investor funds away from concentration in government securities.
“This is the first guarantee company that is focused on sustainable development and climate change in East Africa. Dhamana will be acting as a catalyst to pool all the domestic liquidity that sits with pension funds, insurance companies as well as money managers and channel it to the real economy that actually needs it,” DGC Chief Executive Christopher Olobo, said.
DGC will be looking to bring to market supporting efforts towards the securitisation of pending bills which closed June 2024 at Sh516.3 billion.
