Capital Markets

Ex-Britam chiefs’ private offer values Cytonn at Sh1bn

Cytonn founder Edwin Dande. The company concluded its private placement offer on March 31. PHOTO | FILE
Cytonn founder Edwin Dande. PHOTO | FILE 

Cytonn Investments, a Kenyan-owned firm, has concluded a private placement offer that valued the company at Sh1.1 billion.

The company sold “more than” 10 per cent of its stake to high net-worth investors.

The firm, founded by former British American investments (Britam) top executives, opened the private placement offer in February that concluded on March 31.

The proceeds of the offer are set to finance new investments.

“Proceeds of the offering will go towards strategic investments in our development affiliate, a distribution platform, and technology,” said the company in a statement following the conclusion of the offer.

This is one in a series of private placements either announced or have taken place in Kenya in the past few years.

Medium-sized lender Chase Bank has announced plans to raise Sh2.5 billion to fund its fast-paced growth. The bank held another private placement in 2011 during which it raised Sh810 million.

Commercial Bank of Africa raised Sh1.5 billion through a similar placement in 2013 to finance its entry into Uganda while Family Bank has recently mobilised cash in a similar manner.

Oil and gas logistics firm Atlas Development and water tanks vendor Flame Tree Holdings mobilised money through private placements last year before listing in the Growth Enterprises Market segment of the Nairobi Securities Exchange.

The attraction of private placement is that a company does not have to make its financial details or business public. Only the targeted investors have access to the company’s details.

The main drawback of a private placement is that it may not always find it easy raising the money given that the general public is not invited to subscribe to the offers.

Cytonn founders were four former British American Asset Management (BAAM) executives including Edwin Dande (former chief executive), Shiv Arora (investment analyst), Patricia Wanjama (head of legal) and Elizabeth Nkukuu (portfolio manager). BAAM is a subsidiary of Britam.

A fall-out happened after a real-estate developer called Acorn signed an agreement for some projects with Britam.

No sooner had the executives moved to Cytonn than the company got appointed as the lead transaction advisers for projects estimated to be worth Sh40 billion, including a large proportion from Acorn.

The executives soon got caught up in a court battle where Britam sought to recover Sh3.9 billion it claimed the former BAAM managers had illegally transferred to the accounts of Acorn’s four special purpose vehicles formed to develop various real-estate projects.

Britam sought to block bank accounts of Acorn’s special purpose vehicles. The court allowed the accounts to be blocked.