Ownership fights over a Safaricom-backed unit trust dubbed Mali has forced the telco to form a rival fund, dropping Genghis Capital and embracing new partners.
The Capital Markets Authority (CMA) on Wednesday revealed it had approved a new unit trust called Ziidi Money Market Fund, which is a partnership between Safaricom and three fund managers-- Standard Investment Bank (SIB), ALA Capital Limited and Sanlam Investments East Africa Limited.
The new fund came amid a vicious fight for control of Mali money market fund pitting Genghis and Safaricom over the telecom operator’s plans to tap SIB, ALA Capital Limited and Sanlam Investments.
But Genghis was unhappy with the late entry of the three fund managers, arguing that the model of the product—which has been on trial for months—was to have a sole fund manager, multiple sources close to Mali told the Business Daily.
SIB had registered Mali’s trademark name at the Kenya Industrial Property Institute (KIPI), but Genghis Capital claimed ownership of the product on grounds it had introduced and sought approvals for the unit trust through the CMA regulatory sandbox.
The sandbox allows for the live testing of innovative capital markets related products under a less onerous regulatory regime to spur innovations and attract fintech companies.
“The wrangling over Mali triggered formation of Ziidi with SIB being the product lead in partnership with Safaricom,” said a top executive at CMA who requested anonymity.
“SIB claimed to own the name, while Genghis claimed to own the product. Mali still remains a licensed product and both Safaricom and Genghis will decide what to do with the product going forward.”
The CMA did not formally respond to Business Daily in an email enquiries.
Safaricom said it would respond to questions at Ziidi’s launch whose date remains unknown while Genghis Capital CEO George Wachira failed to respond by press time as earlier promised.
Safaricom in 2019 tapped investment banker Genghis Capital as the partner fund manager for the rollout of the unit as the telco raced to broaden its successful M-Pesa mobile money platform into wealth management.
Genghis Capital has been the fund’s administrator since late 2019 when the M-Pesa-based collective investment scheme went to market on a pilot basis.
Disclosures from Safaricom show that the Mali Money Market Fund assets under management rose to Sh3 billion as at September.
Mali, which has CMA approval, is yet to be launched to the public amid delays in receiving regulatory nod from the Central Bank of Kenya (CBK)—which regulates M-Pesa that platform hosting the mobile phone based unit trust.
Mali remains licensed as a collective investment scheme by the CMA after getting the regulator’s green light in the first quarter of 2023.
Safaricom allows its subscribers to make small payments of as little as Sh100 via M-Pesa that will be placed in a collective scheme for investments in assets like stocks, fixed bank deposits and government securities.
The subscribers will get a return either from dividends or capital growth of their units in the latest plan to grow the mobile money platform beyond sending and receiving cash, tapping loans as well as paying for goods to include insurance and wealth management.
Safaricom pocketed Sh11.6 million in revenues from Mali during the six months period to September from a lower Sh6.2 million a year earlier.
The growth in Mali’s MMF despite the lack of new investors points to the fund’s growth from reinvestments made by the initial pool of unit holders.
Both Safaricom and Genghis did not disclose the revenue share model for the partnership.
Earlier this month, Safaricom had looked forward to unlocking the pending CBK license for Mali, taking the fund to the masses.
“At Sh3 billion, we are already at the top list of collective investment schemes by assets under management. We are now expanding, and we will be making the announcement soon,” Safaricom chief finance officer Dilip Pal told this publication in an interview on November 7.
CMA ranked Mali Money Market Fund as the seventeenth largest collective scheme as of September 30, 2024.
Mali primarily invested in fixed deposits where it had assets worth Sh1.5 billion while its exposure to securities issued by the government stood at Sh595.9 million.
A further Sh524.3 million was held as cash and demand deposits while the balance of assets was spread across listed securities and as investments in other unit trusts.
Ziidi, is expected to mimic Mali in targeting low-income savers with the minimum investment amount set at Sh100 according to a source close to the fund’s operators.
Money market funds are the most popular form of collective investment scheme and primarily invest in short-term instruments such as Treasury bills and fixed deposits.
The entry of Safaricom as a partner in the CIS ecosystem is expected to intensify the competition in a field played by top fund managers including CIC, Britam, Old Mutual, ICEA and NCBA Group.
CMA had approved 54 collective investment schemes as of October 31, 2024 of which 35 are active.
The AUM of the schemes has steadily grown in recent years, reaching Sh316 billion at the end of September from Sh206.7 billion at the same time last year.
“Ziidi Money Market Fund is expected to empower unit holders by offering accessible and diversified investment options as part of the broader National Government’s financial inclusion strategy,” said CMA chief executive Wyckliffe Shamiah while announcing its approval.
