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Recent Topicals

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Q1’2024 Unit Trust Funds Performance Note

May 29, 2024

Unit Trust Funds (UTFs) are a form of Collective Investment Scheme that pools capital from multiple investors to invest in a diversified portfolio of assets, managed by a Fund Manager, with the goal of generating returns for the investors. Expert fund managers oversee these funds, allocating the pooled capital into a variety of securities such as equities, bonds, and other approved financial instruments. The objective is to achieve returns that match the fund’s specific goals. Following the release of the Capital Markets Authority (CMA) Quarterly CIS Report – Q1’2024, we examine the performance of Unit Trust Funds for the period ended 31st March 2024. These funds have seen consistent growth in total Assets Under Management (AUM) and are one of the preferred investment choices in Kenya. Additionally, we will delve into the performance of Money Market Funds, which are a sub-set...

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Progress of Retirement Benefits Schemes in Kenya - 2024

May 26, 2024

According to the Retirement Benefits Authority (RBA) Industry report for December 2023, assets under management for retirement benefits schemes increased by 9.4% to Kshs 1.7 tn in December 2023 from the  Kshs 1.6 tn recorded in 2022. The growth of the assets can be attributed to the enhanced contributions to the mandatory scheme, NSSF, which began in earnest in February 2023 following the court of appeal ruling that set aside the initial ruling of the Employment and Labour Relations Court suspending implementation of the NSSF Act. The Act, which increased the contribution rates from Kshs 400 to 12.0% of an employee’s monthly earnings, with a 6% deduction from the employee and an equivalent 6% deduction from the employer, had been rendered unconstitutional...

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Joint Venture Agreements (JVs) in Real Estate

May 19, 2024

Introduction Joint Ventures (JVs) can be defined as strategic arrangements between two or more businesses, where resources are pooled to work together on a project. Joint ventures are vital in bringing together businesses from different areas of expertise for business purposes. JVs can take many forms such as; i) limited liability company- in the case where the project will incur a lot of capital, the party may decide to form a new company for this purpose, mostly referred to as a ‘special purpose vehicle’. The new company will be a separate legal entity, ii) a partnership, and, iii) a contractual joint venture- two or more parties collaborate or share knowledge and expertise on an ongoing basis, here an agreement is well drafted. To put this into context, let’s say a company, Company A, has extensive expertise in Real Estate and has delivered many successful projects. Another company, Company B, owns a well-situated piece of...

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Nairobi Metropolitan Area Residential Report 2024

May 12, 2024

In 2023, we published the Nairobi Metropolitan Area Residential Report 2023 themed ‘Resilient Market with Steady Growth Potential’. This week, we update our previous research with the Nairobi Metropolitan Area (NMA) Residential Report 2024 titled ‘Untapped Investment Niches’ by highlighting the residential sector's performance in the region in terms of price appreciation, rental yields, and market uptake, based on the coverage of 35 regions within the Nairobi Metropolis. We shall also discuss factors influencing residential supply and demand, current developments affecting the industry, and conclude with a look at investment options as well as the sector's general outlook for the coming fiscal year. As such, we shall discuss the following; Overview of the Residential Sector, Recent Developments in the Sector,

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Unlocking Kenya’s Capital Markets

Apr 28, 2024

The Nairobi Securities Exchange (NSE) last recorded an Initial Public Offers (IPOs) in 2015, when Stanlib Investments issued an IPO of the first Real Estate Investment Trust (Fahari I-REIT) at the bourse, managing to raise Kshs 3.6 bn against the target of Kshs 12.5 bn, 28.8% success rate. This translates to an eight-year IPO drought, with the most recent activity at the bourse being the listing by introduction, meaning no money was raised) out of the Local Authority Pension Trust (LAPTRUST) Imara Income Real Estate Investment Trust (I-REIT) under the Restricted Sub-Segment in 2022. LAPTRUST holds 100.0% of the Imara I-REIT shares with no initial offer to the public. Currently, the bourse has 66 listed securities with a total market capitalization of Kshs 1.7 tn as at 25th April 2024. The bourse continues to be Safaricom-dominated, with Safaricom’s market capitalization of Kshs 653.1 bn equivalent to 39.1% of the entire market capitalization. Additionally, Safaricom (39.1%) an...

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