31 July 2010

Kenya: The Face Behind Transcentury's Rapid Growth

Nairobi — The question on market insiders' lips was whether Kenya's renowned investment firm, Transcentury, would blink as it squared it out with Egyptian private equity firm - the Citadel Group - for control of Rift Valley Railways Investments.

Other minority shareholders, in the loose coalition that has so far struggled to revive the dilapidated railway line, had been bought out by the deep pocketed Egyptians. These were Prime Fuels, Centum Investments, Mirambo Holdings, and Babcock.

Transcentury held a 20 per cent and was at risk of playing second fiddle to the Egyptians.

But as reported in our sister publication The EastAfrican, Transcentury has captured the chair's post in the new concession which also had the investment firm's share increase to 34 per cent. The Egyptians hold a controlling stake of 51 per cent.

Credit for the tenacity that Transcentury has developed is largely lumped on its founding chairman James Gachui, according to some of the original 29 members of the investment firm who spoke to the Sunday Nation.

Mr Gachui did not respond to questions from Sunday Nation as he was said to have travelled abroad. Previously "an oil man" who rose through the ranks at Total, Mr Gachui is described as "very private, but trusting if you win his confidence".

Jimnah Mbaru, a one time Nairobi Stock Exchange (NSE) chairman and owner of stock brokerage firm Dyer and Blair, is among his key lieutenants in Transcentury.

Mr Mbaru is said to have won Mr Gachui's confidence from their early exchanges as investors at the NSE.

It is also Mr Mbaru's stock brokerage firm that currently handles the over the counter trading of Transcentury's shares after the investment firm decided to open up to more shareholders.

It is to Mr Mbaru and a Joe Kamau that Mr Gachui turned to with the idea of pooling their resources through an investment group, Transcentury in 1996.

Together, the three went preaching the gospel of "the sweet rewards of capital invested wisely" looking for other members to join their investment firm in a story that has been widely told.

They managed to attract 29 members with a contribution of Sh29 million.

Fast forward 14 years later and Transcentury has grown in leaps and bounds with the investment portfolio estimated at Sh9.1 billion.

Some of their targeted investments have been in the energy sector (in listed East African Cables and KPLC) which Mr Gachui has a deep understanding of. Other sectors include financials, agriculture and recently infrastructure in RVR.

The entry of Citadel, however, meant that Transcentury faced another animal of its kind in its home turf.

Not only is Citadel deep pocketed - it has $ 8.3 billion (Sh697 billion) in investments under its control - but by virtue of being outsiders were less intimidated by political meddling.

Transcentury insiders say at stake in keeping control of Rift Valley Railways, was the "sweat equity" the firm had invested and a deep sense of patriotism to allow the deep pocketed Citadel rule the roost of East Africa's important infrastructure asset - the Railway line.

Some of the insider members who spoke to Sunday Nation say it was down to the sacrifice, driving ambition, persistent drive and unity of purpose championed by Mr Gachui which has seen through the investment house since its formative years in 1996.

Mr Gachui had been running his own family business, Jimana Ltd, which apart from having invested in the Internet service provider, Wananchi has interests in everything Transcentury has touched. This is seen as a calculated move to protect his interests in the investments the group undertakes.

Other investments and chairmanships apart from Jimana and Transcentury, include, IT firm Seven Seas Technologies and a directorship position in private equity firm East Africa Capital Partners.

Transcentury announced its arrival in the market through a Sh230 million acquisition of listed firm East African Cables in 2003.

Lately though, the firm has hit turbulent waters with their Tanzanian subsidiary incurring bad debts. Some market whispers say the rough patch East African Cables, and by extension Transcentury, now finds itself has been as a result of losing young, aggressive and talented managers.

Among the notable exits have been Mugo Kibati, former CEO EA Cables, Tony Waninaina and James Mworia (CEO's of Transcentury) and Eleanor Kigen a well respected investment analyst.

But in their quest to maintain young talented managers, Transcentury appointed Gachao Kiuna, 32, to manage its Sh9.1 billion portfolio.

Tellingly, though, he is the son of Ngugi Kiuna, another of Transcentury's original 29 founding partners.

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