Some define investing as the art of playing with money and
multiplying it; no doubt, everyone loves a good investment. BRENDA
OTINDO spoke to one of Kenya’s young executives who is in the business
of investing.
WHEN I MET James Mutitu Mworia, I remembered something I had read in
Peter F. Drucker’s book: Management Challenges for the 21st Century.
Drucker says success in the knowledge economy comes to those who know
themselves – their strengths, their values, and how they best perform.
If you have got ambition and smarts, you can rise to the top of your
chosen profession, regardless of where you start out, Drucker writes.
I remember it was a chilly July afternoon and I was sitting on the
5th floor of International House waiting to speak to Mworia, the Chief
Executive Officer (CEO) of Centum Investment Company Limited. ‘Could
this be the African version of Warren Buffet’s Berkshire Hathaway Inc?’ I
quietly wondered. Centum like Berkshire is in the business of
investing and Mworia is the man who is at the helm of this
multi-billion investment company.
The Centum brand name is only two years old having re-branded from
Industrial and Commercial Development Corporation (ICDC). Apart from
the change in name, Centum also adjusted the end of their financial
year from June to March. A public listed company, Centum is in the
business of investing its shareholder capital in the equity of other
companies.
Unlike Buffet, the Centum CEO is younger – in his early 30′s –
adding him to the growing list of Kenya’s under-35 CEOs. Centum has a
history of young executives; Peter Mwangi, Tony Wainaina and Mugo
Kibati all who have once headed Centum. Mworia has worked at Centum for
almost a decade with a break in between having joined the firm in 2001
and risen to become of Head of Investment in 2005 in the then ICDC. He
took a short hiatus and returned in 2008 as the CEO replacing Peter
Mwangi – now CEO of the Nairobi Stock Exchange (NSE).
Mworia is an advocate of the High Court, a Chartered Financial
Analyst and a Certified Public Accountant. This is an interesting mix
that has produced an investment manager. He says he has succeeded by
carefully managing the three disciplines which have helped him in
managing Centum. “This calls for proper planning,” he says.
Forty years on
Centum has been in business for over forty years – from 1967. It was
started with the objective of mobilising capital from Kenyans. “Then
we had 3,000 shareholders with a capital value of KSh 30 million.
Currently, we have 38,000 shareholders valued at KSh10billion,” he
says.
In 2007, ICDC went through a re-branding process that saw it change
its name to Centum Investment Company Limited – ending the confusion
between ICDC and ICDI Investment Company. It also resulted in an
expanded ambition identity among African investors.
The change in name also came with a change in strategy. “We had to
change our focus to the entire African continent. The firm also had to
refurbish its investment channels to work in realistic time frames, at
least 10 years, considering the various economic challenges.”
Because of the turbulent economic times that included the global
recession and the post-election violence that hit Kenya in 2008, Centum
saw the need to re-invest in other portfolios. Centum now also invests
in well run and managed medium-sized companies with a view of
influencing their strategic direction through broad participation.
The main portfolios that Centum participates in are private equity
both in listed and non-listed firms which form at least 60 per cent of
the capital base.
Companies include: UAP Insurance, AON Minet, Nairobi Bottlers,
Kenya Wine Agency, Kisii Bottlers, General Motors East Africa and
Longhorn Publishers. The firm also has shares in quoted private equity
which are marketable securities in Africa; an example being Carbacid
Ltd.
“This is a growing sector and I see the strategy to influence
decisions now being seen.” Mworia says Centum’s investments are doing
well in Kenya, Uganda, and Ghana and now Centum seems to be eyeing
Kenya’s thriving real estate market.
The RVR deal
Earlier this year, Centum opted to offload its shares in Rift
Valley Railways (RVR), paving way for fresh re-structuring of the
company managing the Kenya-Uganda railway. The company, in a statement,
announced that it was selling off its $6 million (KShs12billion) stake
in RVR for $4.5 million (KShs nine billion). This was $1.5million
(KShs3 billion) less than its initial investment at the company.
Centum was, however, categorical that the 10 per cent stake would
only be transferred to interested existing shareholders. This decision
was in line with the business to purchase and sell business and also
the fact that RVR was not benefiting shareholders. Centum was only able
to recover 75 per cent of initial investment. Analysts indicated that
Centum’s move to shed-off its shares came after the US$ 6 million loss
in RVR. The 70 per cent decline in profit, experts insisted, also
resulted from a shortfall related to a reduction in business at the NSE
and its KSh7.6 billion write-down in RVR.
As the CEO of an investment company, Mworia says one must look
forward at the pending risks, make a plan, forecast returns and realise
that there are possible constraints to the investment being made. He
adds that the liquidity levels of both the market and the upcoming
firms must be considered. “In relation to all these is the fact that
the government plays a key role in licence fees and laws alongside
taxation levels.”
The main interest of Centum is in investments that will produce
substantial but not a controlling stake. This ensures that Centum has a
governance stake in such firms.
As many as the demands for good investment exist, there is still
the challenge to have a vision, mission and a definite definition of
the business. This, according to Mworia, aids in the development of
goals for the organisation subsequently aligning the objectives and
ensuring their implementation. “Our vision is to be the lead investment
company and brand in East Africa and become both the investor of
choice and a premier capital mobiliser.”
Broken down, the mission is Mworia’s job description as his core
objective is to generate returns for Centum’s shareholders and
contribute to the creation of wealth and employment regionally.
Kenya is East Africa’s most vibrant economy but Mworia believes
the country and its neighbours are not yet there. He expresses his
concern on the lack of a clear strategic planning by investors.
“A strategic plan as such is the best package for investors,” he
says and adds that strategic planning is not a technical term but a
practical tool of management. “This calls for continuous monitoring and
evaluation of returns and objectives which must be tangible.”
Investment advice
Mworia says investing especially in the African market is a
combination of many things. He borrows the principles of Benjamin
Graham’s – the Father of Modern Security Analysis and says investors
must: be conservative in your valuation assumptions where the chief
risk is not overpaying for excellent businesses, but rather, paying too
much for mediocre businesses during generally prosperous times; only
purchase businesses you understand; recognise your own limits when it
comes to performance; measure your success by the underlying operating
performance of the current business; have a rational disposition toward
price ratios; minimise frictional production expenses, and keep your
eyes open at all times for new opportunities.
So what then are the traits of a smart investor? I prodded. “A
smart investor should be patient, disciplined, systematic, a good
planner, ambitious and focused at all times. Hold onto your vision at
all times.”
One of the things that keep Mworia on his toes is the fluctuating
inflation rates. A higher interest ratio makes money more costly to
re-invest as the returns are much lower. Firms like Centum are affected
in such situations as this discourages new investments. “Economic
growth should ideally be driven by domestic consumption and investment.
However, this is not so in Kenya which is mainly a government
expenditure driven economy,” he says. “No wonder, the loan rates are
not local market driven leaving the investor at the mercy of those who
fund the government spending,” he notes.
With all these insecurities should one place their money in a capital investment firm like Centum?
“To start with, nothing should make you fear investing as with a
good balance, you will benefit. Investment is a critical tool that
frees many professionals to use their time well as managers. It also
encourages innovation and creativity both physically and
psychologically.”Mworia encourages investors to put their money where
it will grow; an example being the information technology and the
telecommunications sector.
Mworia the manager
Mworia’s dream is backed by one principle; to build an innovative
investment environment with little if no stereotypes. “This will make
me be fortunate to have a positive impact on Africa’s turnaround.
As a manager Mworia hold certain values dear:
- Integrity – One must be accountable to the community and people they are working with at all times;
- Diligence – A good manager should be committed to their job and work without queries on the quality of their final job;
- Focus – A vision is needed by all good managers in order to create targets thus a focus;
- Expertise – Knowledge and qualifications do not hurt, thus one should have information on what they are doing and
- Maturity – A good manager should grow from one level to another and accept correction, a key sign of maturity in a manager. “It is not the amount of papers or long-term experience one has. It is what you do with what you have!”
Mworia is on top of his game because he has kept his eyes and ears
open and mind working. On retirement: “Not until my mind stops
working!” Like in Drucker’s definition of success Mworia knows his
strengths, values, and how he best performs – the reason he is on top.
The lowdown
- Age: 32
- Family: Married with one son
- Education: Alliance High School, Strathmore University and University of Nairobi
- Hobbies: Football, rugby and travelling
- Life Principles: Have no sleepless nights, delegate duties and spare time for you
- and your family
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