July 19, 2019

Meet 40-year old diaspora returnee who built $800 million Asset Management firm

Kenyan born investor, Edwin Dande has surpassed odds to emerge one of Kenya’s best entrepreneurs with $800 million asset management firm, Cytonn Investment.

In a feature by Forbes recently, 40-year old Dande narrates his journey towards establishing one of the largest asset management firms in the country.

He is an investment banker and an accountant who holds a degree from the Monmouth University and an MBA majoring in finance from Wharton School University of Pennsylvania. He is also a certified public accountant.

Dande worked as an accountant and investment banker at KPMG and Lehman Brothers.

He has also worked for Bank of America and Merrill Lynch.

He returned to Kenya in 2011 where he landed a Job at Britam, a multi-billion financial services group as the CEO. He worked at the firm for three years until 2014 when he decided to opt out and start Cytonn together with a few friends he worked with.

Dande says after the fall out with his bosses at Britam, he decided to start Cytonn to create an independent platform to focus on the interest of our clients. He grouped up with other investment teams as is common practice and formed his own brand.

But it was not an easy task to start today’s firm as they had to concurrently launch a new brand, attract talent and raise funds while fighting over 12 different lawsuits.

“Of course our former employers sued us with all manner of baseless claims, and thankfully in our new constitutional dispensations, the courts are fairly reliable and all the matters at this point have either been withdrawn or are at the tail end. But we have no issues at all with our former employers, they may have issues with us, which from our perspective are really just trying to cut down a competitor, but so far, it has strengthened our resolve”, Dande tells Forbes reporter.

Over the last 5 to 7 years, majority of the market-invested in traditional markets (equities, fixed income and bank deposits), have returned about 10 to 12% per annum. Investment grade real estate and private equity, has returned roughly 20 to 25% per annum as he says.

Currently, the company has 250 staff from the previous four who founded it. They are handling 13 projects-from zero worth over $800 million and expect to close 2017 with at least $5 million in profits.

He says that real estate, which is one of the largest sectors that his firm invests in, is and will remain a lucrative venture unlike in other parts of the world where it has burst.

Dande notes that in the Kenyan real estate scenario, it has just been institutionalized and it remains a developer’s market.

“Largely, the Kenyan real estate market remains a developer’s market, and our outlook for real estate remains positive, driven by the high returns being earned in the sector that are projected to continue.”

The firm is currently handling 11 investment ready Real Estate projects mostly in the residential theme.

What does Cytonn do?

The firm raises money from clients affiliated with Cytonn and it is pumped in high returning investments with the real estate being the most dominant. The firm also invests in companies that are undervalued which is how it has accumulated a stake and is now the 14th largest shareholder in KCB Group.

Challenges

Dande cites that negative media campaign against the firm at the beginning dealt a huge blow on them. They were victimized after Britam took them to court. He says he was much scared of having personal funds frozen as that would cripple his whole dream to start today’s multi-million asset investment firm.

Secondly, getting and retaining talent since asset investment is a new market in Kenya as skills in the sector are required as well as a culture of “intense high performance” which is lacking.

Lessons learnt

“What have we learned? For me it has enhanced my confidence in the future prospects.”

Business, especially the investments business, is still largely under the control of a few players, not necessarily in the interest of clients. For the economy to grow, to create more jobs and deliver more innovative solutions, we have to open up the business environment to more players and allow innovative products. The established players simply do not want that, they shall go to great lengths using the justice system and even regulators to try and distract competition, but fortunately we are on the right side of history – you can never stop innovation and progress,” says he.

Future plans

Cytonn currently has concentrated its focus on development of real estate and market penetration in the Kenyan market though private equity. But they are conducting market research in Rwanda and Uganda in a bid to accommodate regional markets in future from East Africa.

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