Clients of asset manager Stanlib Kenya have withdrawn Sh75 billion ahead of the buyout by rival ICEA Lion Asset Management.
The outflows, representing over half Stanlib assets under management (AUM), have been disclosed by the company’s parent company Liberty Holdings of South Africa.
The multinational says in a trading update that Stanlib’s “discontinued mandates” stood at R11.1 billion (Sh75 billion) as of December 31, 2019.
“These outcomes are consistent with the decision to exit asset management in these regions,” Liberty said of the assets shrinkage in the Kenya and Uganda fund management businesses that it is selling.
The outflows are estimated to have reduced Stanlib’s pool of funds to some Sh60 billion from the previous Sh135 billion.
It was not immediately clear what impact, if any, the client exits will have on the size of cash payment ICEA will make to Stanlib in the deal expected to be completed June 30, 2020.
A source familiar with the transaction said some of the clients who left Stanlib joined ICEA while the rest dispersed to other fund managers.
Clients were notified of the pending transaction and were given an option of leaving or remaining at Stanlib.
Stanlib has incurred significant operating losses in recent years when it has also relied on capital injection from its parent company, Liberty said.
In seeking to cut losses, the multinational was looking for a firm that could purchase Stanlib within a short timeframe.
ICEA, owned by the Philip Ndegwa family, stepped in to buy the company in a transaction that gives it an opportunity to scale up its asset management arm besides entering the listed property fund business.
ICEA is expected to run an asset pool of more than Sh200 billion post-transaction, placing it first or second in the rankings of fund managers.
Sanlam Investments East Africa Ltd (SIEAL) has been the largest asset manager with a portfolio valued at Sh277 billion, according to the latest available industry statistics.