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Millionaire James Mworia Kenyan CEO of Centum Investments East Africa’s Largest Private Equity Firms

 

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
The writer is the sub-editor of MANAGEMENT
Email: botindo@kim.ac.ke
This entry was posted in Business ExecutivesManagement Magazine.

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