Cytonn Investment Company, presumably one of the biggest asset management company in Kenya is swamped in a financial crisis and at the verge of collapsing, operating at a loss of over Ksh560 million in 2017. In 2016, the company made losses of over Ksh415 million.
This is despite the mother firm, Cytonn Group announcing a growth in profit after tax of 276.7% to Ksh398 million for the year ended 31st December 2017, up from Ksh105.7 million in 2016.
To make it worse, most clients starting to shy away from the dealings of the firm according to an insider who spoke to Kahawa Tungu.
Our source intimates that most clients under the installment plan are either not up to date with their payments or are forfeiting the units after learning of the delays in construction and over-pricing.
“In fact am sure some of the projects are only on paper and will never materialise,” says our source who sought anonymity.
The salaries and suppliers are being paid through the clients’ investments, hence stalling their projects. Furthermore, when clients withdraw their investments, they have to wait for about a week for enough money to be collected from other new investors to pay them, the case of robbing Peter to pay Paul.
In a bid to avert the public eye from its struggles, the company opened a college that guarantees instant employment to its students upon graduation. The new project promises 18-20% in returns to investors, one of the biggest returns in the asset industry, but hard to realise. One of the board members of the college bolted out, terming it as a pipe dream that will never materialise.
The company that opened in 2014 by a team of former employees of British American Asset Managers Limited (BAAM) is now crumbling slowly. The company started in what looked like betrayal of four executives to their former employer, BAAM, after they registered their own company transacting the same business with the company they were working for.
In 2014, a team of four in the top cream management at BAAM unceremoniously bolted out and formed a similar company, Cytonn Kenya. The team included Edwin Harold Dayan Dande who was its CEO, while Elizabeth Nkukuu was the Senior Portfolio Manager and Shiv Anoop Arora was the Investment Analyst. Patricia Njeri Wanjama was the Assistant Company Secretary as well as the Head of Legal Affairs.
The company – BAAM – was experiencing financial conflicts with its clients and partners. The four were allegedly colluding to collapse BAAM, as they had already registered their company, Cytonn Investments.
This saw them arrested, their phones and other electronic gadgets confiscated by the police. What followed was a court battle, with the four seeking to stop any investigations against them.
In a judgement delivered on September 14, 2016 by Justice Odunga, all investigations against the four were adjourned through a court order.
The court issued an order prohibiting the Inspector General of the National Police Service and the Director of the Directorate of Criminal Investigation whether by themselves, their servants and/or agents from arresting, harassing and/or in any other manner interfering with the liberty and/or property of the four, together with their company, Cytonn Investment Management Limited.
This meant that the company, Cytonn, was given green light to operate. To the public, it was like declaring that the company was trustworthy and that the former obscurity operations in their former employer was now cleared.
The officers went ahead to use their ‘success’ at BAAM to vouch for their company.
Four years down the line, the company has painted the picture of one of the best asset management companies in East Africa though public relations, despite making a series of losses and conflicts with their clients and partners.
Most probably, the crisis that happened to BAAM under the watch of the four is repeating itself at Cytonn.
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