Nabo Capital Takes The Industry by Storm

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Pius Muchiri, Managing Director, Nabo Capital.

The fund management firm bets on its rich experience, expertise and proven track record to create wealth for its clients

The launch of Nabo Capital in 2013 was timely. According to the company’s Managing Director, Pius Muchiri, the idea to establish the firm was linked to the success of Centum’s QPE. “Many people came to Centum saying they liked our story, our track record, and the fact that the company knows how to create wealth. They wanted to participate and imitate our track record without necessarily having to buy Centum shares.”

Nabo is a wholly owned subsidiary of Centum Investment Company Limited. It was merely a department – the Quoted Private Equity (QPE) Division within the group that spun off to become a fully-fledged entity with its own structures. The company opened its doors to third party funds, who can now benefit from the expertise attained in the African markets over the years.

“Today, Nabo Capital’s assets under management stands at about $150 million and we plan to grow it further,” says Pius who notes that the firm manages some of the best and largest funds in the world, and draws clients from across the globe.

Going down memory lane
The leading fund manager has a rich history. It is a 3rd generation investment firm, dating back to 1954 when the Industrial and Commercial Development Corporation (ICDC) was formed to be the investment arm of the government. Then, investment activity was a preserve of only a few elite individuals and that triggered ICDC to form ICDC Investment in 1967 to become the investment vehicle for Kenyans access to different investment opportunities and boost economic growth.

ICDC Investment was formed with a seed capital of USD 26,000. It was listed in the same year on the then Nairobi Stock Exchange. The investment firm was later rebranded to Centum.

Given that many African countries had just gotten independence and multinationals were coming to set up businesses in the continent, Centum was positioned as the preferred local partner as it was already established as the investment vehicle for Kenyans. Today, the company’s legacy portfolio is associated with multinationals such as General Motors and the CocaCola Company.

From 1967 to date, the firm has grown to become the largest private equity firm that is listed in East and Central Africa.

Unbundling the portfolio
Pius reveals that Centum was worth Ksh. 6 billion in 2008 and the fund manager then embarked on a revolutionary strategy dubbed Centum 2.0 by looking at the available opportunities not only in Kenya, but across the continent. “We set very steep targets to grow the company five-fold to Ksh. 30 billion by 2014,” he observes.

The portfolio was unbundled into three business lines- private equity, real estate and public markets now called the quoted private equity. The business lines were separated to generate unique track records that would be used to attract investors. Pius was tasked to grow the quoted private equity portfolio.
The managing director points out that many companies trading in most African stock exchanges are regarded as illiquid and are under researched. As a result, very few investors are interested in them. “This is where we saw the opportunity and decided to use our private equity expertise in the public space,” he says.

“We bought our first company for Ksh. 418 million and after two years, sold it for Ksh.1.2 billion,” recalls Muchiri. That was proof of concept and within a few years, we had created a track record.
With time, the division proved successful and the opportunities that were coming across were much bigger than could be accommodated at Centum. The need for a platform that could help to co-invest them with other investors was essential. Nabo Capital was therefore born. It received a license from the Capital Markets Authority (CMA) to manage third party funds.

Target market
Nabo targets institutions and high-net worth individuals. For institutions, the fund manager targets sovereign wealth funds, and today, it manages the largest fund in the world.

The company has diversified its products by offering access to investment opportunities across Sub-Saharan Africa. One such product is segregated accounts, which are tailored to suit client’s specific needs and ensure they meet their financial goals.

Another product offered by the company is unit trusts. Pius observes that it is probably the only unit trust that invests across the African region, specifically targeting high-net worth individuals.

Competitive edge
“I think what sets us apart is our rich heritage of over 50 years,” says Pius adding that “the heritage has given us experience, a brand and a reputation having worked with the best in the world over the years.”

Pius notes that the company has a unique set of people who are on a transformative mission. “The Nabo DNA cascades from the Centum Group. The DNA is what determines the kind of individuals who are likely to succeed in Nabo and is really what sets us apart from the rest,” he reveals.

Furthermore, Nabo has a distinctive private equity approach. The company is not satisfied with talk level alliances, but conducts detailed background checks on companies it invests in. The company also prides itself on its track record, which ranks among the best in Africa. “For every 1,000 dollars invested in 2009, we have grown it to an excess of 4,000 dollars,” reveals the managing director.

Most remarkably, Nabo does not view itself as a Kenyan fund manager, but as a pan African fund manager. It is among the few firms in the continent offering access to investment opportunities in any African market except South Africa.

Road ahead
“In the last five years, we have been setting up the company for success. We have made a strong foundation, set up systems and processes and created a track record,” observes Pius.

Going forward, Nabo plans to scale up the business to make its brand more visible. “We also want to give our customers first class experience,” concludes Pius.

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