Kenyans have for decades preferred investment groups (chamas) as a way of saving and consolidating their money in order to access investments that would otherwise be out of reach for individuals. One of the most talked about success stories is Transcentury, an investment group started as a chama in 1995 at a golf course in Nairobi and which has grown by leaps and bounds since.
Mwai Kihu, a former planning manager at Sameer Africa, is among Kenyans who believe in the potential of investment firms— so much so that he quit his stable job in the tyre-making firm to venture out. His gamble has paid off with his investment group’s (Amalgamated Chama Limited) latest conquest being a Sh15 million buyout in April of Ethical Fashion Artisans, a textile company set up by the United Nations in 2009.
Amalgamated Chama Limited has diversified investments in Home Afrika,Metropol Limited,Unaitas ,Herbal Garden,Investq,Ethical fashion and Envirosafe Limited
“I had reached a point in my life where the need for self-realisation was strong,” Mr Kihu, 63, told Business Daily at his Uniafric House offices along Koinange Street.
“I wanted to test new waters in the world of business. My last pay slip was in October 1999.”
Years after resigning from Sameer, Mr Kihu had still not found his bearing in business. His fortunes however turned in 2007 when micro-lenders were trying to gain a foothold in the Kenyan market. These saccos were at the time looking for individuals and firms to offer insights on setting up as well as commercial advisory services.
Mr Kihu, together with a business partner Patrick Kariuki, formed the Kenya Association of Investment Group. The new company began offering training and management skills to saccos on how to sell their products in the market.
“We basically acted as a link between the saccos and customers, informing the latter what they market required including buyout opportunities for them,” said Mr Kihu. Some of his clients advised him to set up a business that would specifically focus on raising capital and target investments and buyouts in profitable venture and share the returns.
He heeded their advice and formed the Amalgamated Chama Limited (ACL) together with four other directors— Patrick Kariuki, Sundeep Raishura, Josephine Chepkoech and David Owino. Mr Kihu was (and still is) the chama’s chairman.
The founding members were required to raise a Sh1 million capital that would help them raise the fund for the initial investments.
‘‘We had two types of members that included other investment groups and individuals. There were no restrictions on members’ nationality,” said Mr Kihu. ACL has over the past seven years grown its portfolio to billions of shillings with most of their investments being in real estate as well as in the manufacturing sector.
Their latest acquisition Ethical Fashion Artisans exemplifies the group’s insatiable appetite for investment. The company was founded in 2009 in Industrial Area by the United Nations, through its agency International Trade Centre.
Ethical Fashion started as a women empowerment firm targeting women in the places such as Mukuru kwa Njenga, Kibera, Kawangware and Laikipia where they made beadworks and leather accessories for export.
The women, who number about 120, would also receive designs and material from international fashion labels and assemble them using local accessories and have them sold abroad for a commission.
Some of these international brands include Adidas, United Arrows, Manor, Sass and Bide, Lancaster, Oskle, Chan Luu among several others. Ethical Fashion’s new owners have since shifted the factory from the Industrial area to the Export Processing Zone premises in Kitengela, retaining all its the employees in the process.
“The beauty of this investment is that it is an impact-based investment programme. At the very end of the value chain, you are involving and benefitting members of the community but not just ACL owners,” said Mr Kihu.
In 2013, the company reported revenues of Sh71.8 million, a 47.7 per cent increase from the previous year’s Sh48.6 million. In November last year, ACL acquired a 30 per cent stake in Envirosafe Limited, a waste management company based in Kitengela.
Envirosafe collects waste from hospitals, pesticide firm and other manufacturing companies and disposes them in an environmentally safe way. Some of company’s clients are British American Tobacco (BAT) and Unilever.
“The company was previously co-owned by a South African and Zimbabwean investors. We bought our stake from the South African,” said Mr Kihu. The company, he adds, is currently in the red but their aim is to have it achieve portability this year even as they plan to expand regionally.
ACL is also currently eyeing investments in the hospitality industry in Loitokitok, Kajiado where they own 600 acres of land. Mr Kihu says they plan setting up a resort on the land, but did not give timelines and cost for the project saying it was still in the planning phase. On money and investments, Mr Mwai says he prefers passive investments and is averse to startups.
“Nearly all startups die in the formative years. I prefer to buy an existing company and if it is doing well, leave it to the management to run it,’’ he said.