Capital Markets

Absa Bank asset arm launches offshore investment services

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Absa bank along Muindi Mbingu Street in Nairobi. PHOTO | EVANS HABIL | NMG

Absa Bank Kenya has launched an offshore investment offering targeting affluent individuals seeking to diversify their investment portfolio beyond the local market.

The new service will be managed by Absa Asset Management Limited (AAML), a wholly-owned subsidiary of the listed bank.

“We are leveraging our global footprint, market intelligence and expertise to set up a well-structured offshore investment infrastructure that not only meets regulatory standards across different markets but also resonates with the needs of clients looking to invest their capital with minimal risk and assured returns,” Yusuf Omari, Absa Bank Kenya’s interim CEO said in a statement.

He added that Nairobi is a leading regional financial services hub with an increasing demand for offshore, hard currency investments.

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Absa’s new service comes at a time when the number of rich Kenyans has been projected to increase by 27 per cent in five years, according to Knight Frank research, creating an opportunity for asset managers.

“We see numerous opportunities for growing this business unit in Kenya given the strategic interventions made to build Nairobi as the financial centre of choice in the continent,” said Simon Gachahi, the head of premium banking services at Absa.

The lender joins other banks that have moved to expand their wealth management services in search of revenue growth and diversification besides attracting clients with comprehensive financial products.

Other banks offering wealth management services include Standard Chartered Bank Kenya, Citibank and I&M Group.

Fund management offers stable and recurring revenues besides developing relationships with wealthy clients who also need other financial services, including banking and insurance.

Stanchart is one of the biggest players in the segment.

The country is reported to have 8,500 high-net-worth individuals, described as those with net assets ranging from $1 million (Sh122 million) to more than $100 million (Sh12.2 billion).

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Surveys have shown that sophisticated investors with substantial assets seek to invest globally as a means of diversification besides accessing higher returns.

The new offering from Absa comes as the lender’s nascent unit trust business has grown rapidly, with its assets under management rallying 265 per cent to Sh1.05 billion in the quarter that ended June from the prior quarter’s Sh287 million.

The lender’s scheme was licensed in November 2020, joining other banks like NCBA and Co-operative Bank n operating unit trusts.

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