Chama to Conglomerate

Tony Wainaina

Description

Chama to Conglomerate' captures the global phenomenon of group investment, whereby like-minded people pool their resources together on a regular basis to pursue business projects with long-term returns. This book shows how they can grow from a small club of investors to a big corporate entity.

Sujets

• Economie gestion
• Corporate finance
• Strategic management

Informations

• Publié par: Master Publishing
• Date de parution: 05 avril 2013
• Nombre de lectures: 0
• EAN13: 9789966052025
• Langue: English

Extrait

I dedicate this book to my incredible wife Wam ũ yũ, and to my amazing children Wambũi and Kamau. For your love, for giving me the time, for keeping me humble, and always hopeful.
Call it a clan, call it a network, call it a tribe, call it a family: Whatever you call it, whoever you are, you need one.
Jane Howard
Special thanks to Carol Musyoka and Waceke Nduati-Omanga. For keeping the faith, and for the priceless contributions, content, ideas, and time that you have given to this project. The journey thus far would not have been possible without you.

About the Author
Tony is a founder and Chairman of Origins IGA, an advisory firm that incubates investment groups in East Africa.
Tony has spent over 21 years in the investment industry. For many of these years, he has pursued his passion of incubating and providing capacity building to investment groups. From inception, he built the management teams, structures, and systems for two of East and Central Africa’s largest investment holding and private equity firms—ICDC Investment Company (since renamed Centum Investment Company ) and Trans-Century Ltd. He has led in the structuring, negotiation, and acquisition of several private equity investments in East, Central, and South Africa.

Tony strongly believes that group investing is a powerful and viable proposition that provides Africans with a real opportunity to create long-term wealth for themselves and to finally stop being bystanders in their own economies.
This is Tony’s first book.

List of Tables
Table 1: Average gross investment values for 15-year holding period
Table 2: Key Result Areas
Table 3 : Specific actions required to achieve the Key Result Areas
Table 4 : Mindset Shift
Table 5 : The Strategic Investment Portfolio
Table 6 : Realising Portfolio Risk
Table 7 : Strategic Plan—quarterly implementation table
List of Figures
Figure 1 : Organic Evolution of the Investment Group
Figure 2: Aspirational Evolution Path of the Investment Group
Figure 3: Investment Group Development Path
Figure 4: The Investment Group Quadrant
Figure 5: Investment Group Degeneration Path
Figure 6: The Risk Return Trade-Off
Figure 7: The Portfolio Status Update
List of Appendices
Appendix 1: Meeting Minutes Template
Appendix 2: Expression of Interest (EOI) Template
Appendix 3: Nondisclosure Agreement Template
Appendix 4: Letter of Intent Template
Appendix 5: Term Sheet Template
Appendix 6: Investment Closure Checklist Template
List of Acronyms
CDS—Central Depository System
DFI—Development Finance Institution
EOI—Expression of Interest
GP—General Partnership
ICDC—Industrial and Commercial Development Corporation
ICDCI—ICDC Investment Company Ltd
KES—Kenya Shillings
KRA—Key Result Area
LLC—Limited Liability Company
LOI—Letter of Intent
LTD—Limited
NDA—Nondisclosure Agreement
NGO—Nongovernmental Organisation
NSE—Nairobi Stock Exchange
PIN —Personal Identification Number
SIP—Strategic Investment Portfolio
SME—Small and Medium-Sized Enterprise
SR—Social Responsibility
SPEC—Strategic Plan Execution Committee
SWEET—Sisters With Eternal Energy and Trust
VAT—Value-Added Tax

Foreword
WHEN TONY WAINAINA TOLD ME that he had completed the manuscript for “Chama to Conglomerate”, I congratulated him on attaining that all too rare status of becoming an author. It is one that many of our leaders, both political and business, fail to achieve.
He then asked that I should write the foreword for this book, and I immediately expressed reservations as to my suitability to do so. I suggested the names of several other persons I felt were far more appropriate. Not that I am yet fully convinced; however, Tony insisted, partly arguing that the business group I am honoured to chair began life to some extent as an investment group. (I must state, though, that the views expressed in this foreword are my own and not necessarily those of my employer.)
Having started out on a note of doubt, I must hasten to affirm that Tony’s own suitability to write this book is without question and, in fact within Kenya, he is perhaps uniquely best placed to do so. Tony presently runs his own business, Origins IGA, which among various activities provides a whole range of services to investment groups from the largest to the smallest, and in between. This obviously gives him special insight to this subject, but the arena of investment groups is one in which he has been involved for a considerable period during his very successful corporate career. As the Chief Executive of ICDC Investment Company (ICDCI), which he joined from Citibank in 1999, Tony set up a professional management team distinct from that at the state-owned ICDC, which had previously provided management services for ICDCI. Now known as Centum Investment Company, ICDCI was established by the Government soon after independence to give Kenyans the opportunity to pool resources and make diverse private equity investments, initially alongside those made by ICDC itself. It was therefore effectively a state-initiated investment group or club, which is now a major publicly quoted holding company. Later in 2007, Tony was again called upon to take up a pioneer role as the first Chief Executive of Trans-Century, which had decided to formalise their group’s management with a professional team following years of being run by the founder shareholders. Trans-Century, which has recently been listed, perhaps best exemplifies in the Kenyan context the description and progression of “from a chama to a conglomerate”.
This book will provide a seminal text for anyone thinking of establishing an investment group, anyone who is a member of such a group, and anyone seeking to study the phenomenon of investment groups not only in Kenya but also in Africa and beyond. However, in my humble opinion, the book’s importance will reach beyond being either an essential ‘handbook’ or an academic treatise because it Tony puts forward a solution to a number of critical challenges that Kenya and, I am sure, other developing nations face:
• We are often reminded that at independence Kenya was at par or ahead of a number of Asian nations, but almost 50 years later they are well-established First World countries, while Kenya remains in the Third World. There are a host of reasons for the different and, in our case, disappointing development trajectories, and a brief study will show that certain fundamental factors make these comparison somewhat inappropriate and possibly unfair. However one valid factor, which must be acknowledged at the same time is that the propensity and culture of saving in Asia far exceeds that which we practice here. If we are to be candid, the situation has not improved over time and generations and presently we are living in an age and society of high consumerism and materialism; one that to some extent is responsible for the high negative balance on the country’s current account. The term “investor” in Kenya has connotations of “foreign”, and one might argue that, too often, the government does not focus sufficiently on promoting and protecting local investors. This can be quite frustrating for the local investor. The reality is that without sufficient culture to save and local capital formation, we are and will continue to be reliant upon foreign investors for most projects of any significance. Investment groups clearly are an avenue for restoring and promoting a culture of saving and even if for that alone, must be encouraged. At the same time, they become a nurturing ground for the elusive local investor, and when one considers the major investments and projects undertaken in Kenya and beyond by the top league of groups, such as Trans-Century and Centum, one begins to appreciate the sheer potential of what could be achieved.
• Tony correctly notes in the preface that most Africans cannot afford to retire because many state and private sector retirement schemes are incapable of funding retirement beyond a number of years, and that well thought out and managed investment groups offer an opportunity for a viable plan. To this, I would only add that the problem of inadequate retirement plans is only becoming more critical. Firstly, with population growth far outstripping economic growth, an escalating proportion of people never secure employment in the formal sector; therefore, even amongst those who are gainfully occupied or self employed, a reducing proportion of the population will belong to retirement schemes. Secondly, society as we knew it, where the older generation could depend on their children, is evolving to the extent that some elderly persons experience near abandonment. In some cases, with the devastating impact of HIV/AIDS, a generation of parents has been reduced such that some of those who should be looking forward to retirement are required to be economically active so as to support their grandchildren. Again, in providing a platform for remunerative investments, these groups can provide a significant solution to social challenges.
• In Kenya and no doubt elsewhere, on account of our consumerism and changing societal practices, wealth is admired and desired. It confers respectability and status and, in truth, we are in danger of worshipping it and making it an end in itself. This is not to suggest that wealth is a bad thing, but when we combine a scenario where we fail to hold accountable those who have acquired wealth through dubious means (with the social demand and peer pressure to have the latest car or apartment) the value placed on attributes such as integrity becomes quite diluted. This affects all strata of society but perhaps is most dangerous amongst the younger generation, who may not have the inclination or patience