Date post: | 16-Dec-2015 |
Category: |
Documents |
Upload: | ronald-millage |
View: | 215 times |
Download: | 1 times |
MIND SPEAK
PRESENTATION BY JAMES MWORIA
1
Agenda
2
1. Background
2. Centum
3. Investment Planning
Background
3
Career Progression
4
2001 – ICDCI intern 2001 – ICDCI Management Accountant 2004 – ICDCI Head of Investments 2007 – TCL Head of Investments 2008- Centum CEO
Centum
5
Centum is the investment channel that provides investors access to a diversified portfolio of unquoted and quoted investments
Our focus is on making investments in private equity (62%), public equity (35%) and real estate
Our vision is to become “Africa’s foremost Investment Channel.”
Our mission is to create real, tangible wealth by providing the channel through which investors access and build extraordinary enterprises in Africa
Our core business
Our Portfolio
% of total portfolio % Stake
Financials 44.3% Aon Minet Insurance Brokers 5% 21.50%
UAP Holdings 14% 24.23%K-Rep Bank 0.3% 3.78%
Kenya Commercial Bank 25% 3.58%Beverages 24%KWAL 2% 26.43%Mount Kenya Bottlers 4% 28.62%Nairobi Bottlers 6% 27.62%
Rift Valley Bottlers 4% 44.03%
Kisii Bottlers 3% 23.87%
EABL 6% 0.45%
Our Portfolio
% of total portfolio % Stake
Publishing-Longhorn 4% 35%
Automotive-GMEA 16% 17.82%
Services 4%
NAS Airport Services 2% 9.13%
Safaricom Limited 2% 0.10%
Infrastructure 0%
Rift Valley Railways (Pty) 0% 10%
Others 4% <1.00%
& more recently 23% of Carbacid
Centum Corporate Performance Vs NSE Index
Annual Percentage Change
Year
Per Share Book Value of Centum
NSE Index with
Dividends included
Relative Performanc
e
2009 -24% -40% 16%
2008 -3% -5% 1%
2007 35% 21% 14%
2006 32% 8% 24%
2005 57% 49% 8%
Market valuations across most asset classes have come down significantly
Market sentiment is very low and this has reduced investor appetite
Risk aversion has increased and this has resulted in increased equity risk premium and higher emerging market risk premiums hence reducing pricing
Many emerging market private equity funds and hedge funds are scaling back
Current Situation
More attractive buying environment with more reasonable valuations
Reduced competition from other investors
Increasing equity investment opportunities as alternative funding options become tighter
Reduced appetite for debt has created demand for equity investment among companies
Opportunities
Permanent capital vehicle with a strong financial position, low leverage and high stable cash flows
Our portfolio companies are market leaders in their sectors with very strong competitive advantage, this positions them to fare well even in a down turn
Flexibility to invest in illiquid assets and outside Kenya
A solid track record in making and managing private equity investments
Competitive Position
Investment Approach
13
Aim to deliver consistent market beating returns
Invest in companies with a track record that solve basic needs or that displace sub-optimal solutions in markets that we understand
sub-Sahara Africa represents the largest region of untapped demand in the world
We will focus on making investments in the following asset classes across Africa:
1. Private equity: take controlling and minority investment opportunities in unlisted companies
2. Quoted Private Equity: take influential positions in listed companies and employ private equity techniques to create value
3. Real Estate: build a diversified portfolio of real estate investments
Strategy Highlights
What we invest in
Asset Class Approach
Private Equity • Make investments of between Kshs 160 – 800 mm per investment to acquire either a controlling or minority equity position
Quoted Private Equity
• Acquire influential stakes in quoted companies and employ private equity techniques to create value
Real Estate • Make real estate investments with a cash flow stream or where one is imminent within 18 months
Investment Planning
16
Investment Planning Process
17
1. Planning
2. Execution
3. Feedback
Case Study
18
Mary is a 30 year old marketing executive in a large multinational FMCG company
Her current monthly take home pay is Kshs 130,000
She expects 5% salary increase every year
She plans to retire with her husband John in Lamu at age 55
She wants to be able to earn Kshs 500,000 a month in passive income for the rest of her life once she retires. She also hopes to still leave behind a sizable inheritance upon her death
She is able to save Kshs 30,000 per month increasing by 5% every year
Problem?
19
Is Kshs 500,000 a month a realistic return objective?
Is Mary’s salary consistent with her dreams?
Should she move to a better paying job?
What sort of return must she aim for?
Should she agitate for an extension of the retirement age?
Mary’s Investment Plan
20
Mary decides to Invest Kshs 360,000 annually increasing at 5% per annum
Mary is a very conservative person and against the advice of her husband John she invests in what he considers very low return assets yielding 12% a year
John is very skeptical that Mary’s savings will amount to much and he does not shy from telling her so
Mary’s Wealth Accumulation
21
Results of Investment Program
22
Upon retirement Mary has a portfolio worth Kshs 78m
She will have invested a total of Kshs 17 m
Her portfolio will generate a passive return of Kshs 780,000 upon retirement
Mary will be able to spend more and still save more in retirement than she did while employed
Myths about Successful Personal Investing
23
You need to be making a lot of money
You need to have special knowledge
You need to invest in very high return assets
You need to work for a long time
Many thanks & Q&A
24