How Britam Owners Frustrated Business With Acorn

Benson Wairegi, britam
Outgoing Britam CEO Benson Wairegi. [PHOTO/ COURTESY]
Benson Wairegi, Managing Director of Britam

Evidence in possession of Kahawa Tungu‘s investigative desk shows that under the leadership of Dande, Britam made billions of shillings through partnerships with other companies, but not without challenges.

Before being flushed out, Dande and his team grew Assets Under Management (AUM) for Britam from Ksh17 billion to Ksh50 billion in three years. However, this was not without challenges, posed by the owners of the company and members of the Board of Management (BOM).

When the four joined British-American Asset Management Company (BAAM) – a subsidiary of Britam Group-, they found a company that was good in mobilising funds through its funding vehicles, but poor in securing investment opportunities especially in real estate and private equity.

This prompted a partnership with Acorn Group Ltd (AGL), which had problems securing funds but good in property development and had been involved in numerous prominent projects. This is the company the four were accused of stealing money through.

However, it was amazing to discover that AGL was not new to BAAM as it was involved in the development of Britam Towers.

Read: How And Why The Cytonn Four Unceremoniously Left Britam

Under the partnership, BAAM acquired 25% stake at AGL, meaning that they had visibility of the happenings at  AGL, with two slots at the board. This means that nothing could happen without BAAM knowing or having a hand in it.

Work was to begin immediately, with a development of a structured real estate products, for high net worth investors, institutional investors and investment vehicles. The deal was struck between BAAM and AGL, with no role for Britam Group.

However, when the matter came to Asset Management’s investment committee for it to be approved, the Board, without explaining, felt that a better strategic fit would be made if the investment was made by Britam Group/the holding company which is majority owned by members of the Britam Group Board.

On August 28,2013, the board approved the investment but referred it to the holding company as the investor, thereby denying BAAM investors the opportunity to share in the AGL investment opportunity.

This was the beginning of conflict between BAAM and AGL who wanted o develop real estate for third party investors.

Read: Cytonn Announces New Projects In Nakuru In Expansion Move

“I felt that the group (Britam) were only concerned with their welfare rather than the investors’ for whom the deal was brokered. This difference in focus and interest, would lay the foundation for a protracted internal struggle that only grew with time,” says Dande in an affidavit.

Following the conflict, an investing entity into AGL was formed, Bramer Properties LLP. Through the new vehicle, the companies closed the first real estate deal worth Ksh83 million, Project Severan.

The board of the group never questioned this project, which was done without their express authority. In fact, Dande and Mr Wairegi, who was the chair of the board and Mr Kirathe, a board member held an update meeting on on January 23, 2014, and a confirmation was given that they (Dande and his team) should carry on.

The instruction to carry on involved a new product called Mezzanine Fund, a CMS-like product backed by real estate.

Read: Kenyatta Family Constructing Ksh500 Billion City At Kahawa Sukari

Despite the tremendous achievements made through the partnership, murmurings continued in the background. Having no interest in the investors, the board was asking the management to pursue a strategy in violation of the agreement signed with AGL, which provided that Britam Group having pushed to be the sole shareholder of Bramer, the investing entity. This would have pushed out AGL, who were instrumental in securing a number of real estate deals.

“This expectation continued to strain the relationship between the board and management with regard to the AGL transaction.For most meetings, the independent board chair, Mr Muli was not in attendance mainly because of his busy schedule as a PS, so most decisions were made in the interest of Group (Britam) not BAAM investors, for whom management had the primary fiduciary duty,” avers Dande.

“If investors do well, the owners of BAAM (Group) would also do well as part of the management fees. In addition, the group would benefit from thr returns to its own investment. But they wanted more,” laments Dande.

The holding company, Britam, and the board started holding secret meetings that sought to spoil the BAAM/AGL deal. Such meetings include that of April 22, 2014 and May 6 the same year. On the May 6 meeting that excluded BAAM management, a plan to acquire 80% to 100% of AGL was hatched. This did not augur well with the partners, but did not however bring down the partnership deal.

Read: Cytonn To Acquire Luxurious Apartment Vendor Wasini Resorts

BAAM continued to work with AGL, identifying sites and setting up projects with the knowledge and approval of Dr Wairegi, Mr Jimnah Mbaru, Mr Peter Munga, Mr Anyiko and Ms Karuri.

One of the potential projects was Kileleshwa/Coral K, which later collapsed due to interference from the board members.

The situation worsened on July 24 2014, when Dr Wairegi without notice to AGL or even discussions with BAAM MD Edwin Dande, stopped payments from CMS and Mezzanine Fund bank accounts to any LLP.

Next, we shall be telling you about the fallout between the Dande-led team and Britam, and how the charges were instigated against them.

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Written by Kahawa Tungu


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