Cen­tum CEO sets new tar­gets after 10 years at the helm

BRIAN NGUGI

Business Daily (Kenya) - - TOP NEWS -

Cen­tum In­vest­ments chief ex­ec­u­tive James Mwo­ria stepped into the com­pany’s cor­ner of­fice in Oc­to­ber 2008 when the firm held as­sets worth Sh6 bil­lion. Ten years later, the bal­ance sheet now stands at Sh67 bil­lion. At 41, the soft-spo­ken ex­ec­u­tive, who swiftly mas­tered the art of grow­ing money at Cen­tum when he was given half a chance as an in­tern, has grand goals for the firm. The Busi­ness Daily caught up with the trained lawyer to re­flect on his 10-year ten­ure as Cen­tum CEO. Ex­cerpts:

YOU TOOK OVER WHEN CEN­TUM MAN­AGED AS­SETS WORTH SH6 BIL­LION

It has been an in­cred­i­ble jour­ney. When I came in my cash (cap­i­tal) was ex­actly Sh10 mil­lion and my over­draft was Sh169.9 mil­lion. We never got a shilling of cash from any share­holder. What the share­hold­ers said is that we want to earn this re­turn but we don’t have any money to give you. They said what­ever you make don’t pay us a div­i­dend. The first five years we ex­ceeded our goals to move our as­sets to Sh22 bil­lion. We will be at 70 per cent of tar­get at the end of 2019. The staff were eight peo­ple and they now stand at about 160. We have had our highs and lows.

WHAT IS YOUR WORST EX­PE­RI­ENCE AT THE HELM?

I have had many. One of our golden rules is to de­liver on prom­ises. My worst mo­ment is when we com­mit­ted to a date (of com­plet­ing the Two Rivers Mall project) and twice we post­poned. Per­son­ally that was my low­est mo­ment. My mantra is you should al­ways strive to de­liver re­gard­less of what­ever prob­lem or chal­lenges you had. For me it’s per­sonal. When we failed on the dead­line I moved my of­fice to Two Rivers un­til the day we opened.

THERE HAS BEEN SPEC­U­LA­TION ABOUT CEN­TUM’S LIQ­UID­ITY, WHAT IS THE TRUE PO­SI­TION?

I’m not aware about such per­cep­tions. We are work­ing on the ob­jec­tive of re­tir­ing our debt ear­lier. Our fo­cus is to be debt-free in the next eight months. The only bond we have out­stand­ing is the Sh6 bil­lion that is ma­tur­ing in 2021. But there is a pos­si­bil­ity of pay­ing it ear­lier. We are work­ing on an ob­jec­tive of re­tir­ing our fa­cil­i­ties ear­lier and we are do­ing it through the ex­its. Our busi­ness is to in­vest, cre­ate value and to exit again. My fo­cus is take Cen­tum to a point where un­less there is a catas­tro­phe it is go­ing to re­main a strong or­gan­i­sa­tion in this econ­omy for a cen­tury. One of the ob­jec­tives to get there is to make sure the bal­ance sheet is very strong. Go­ing for­ward we will now just fund our ac­tiv­i­ties with in­ter­nally gen­er­ated funds.

SOME OF CEN­TUM’S LARGE-SCALE PROJECTS HAVE SOAKED UP MUCH OF YOUR CAP­I­TAL, HOW DO YOU PLAN TO KEEP FUND­ING FU­TURE DE­VEL­OP­MENTS?

I think peo­ple don’t un­der­stand how we are able to fund many of our projects si­mul­ta­ne­ously. When we con­ceived the Two Rivers Mall project we didn’t have the money to ex­e­cute the whole project. But we had the idea and we could ex­e­cute it and then we were able to at­tract other eq­uity in­vestors. That way each project is able to stand on it­self with other eq­uity in­vestors. That’s our model. That calls for the lo­cal part­ner to be some­one who keeps their word. We have not had lit­i­ga­tion in the past 10 years we have been car­ry­ing out projects.

BUSI­NESS TY­COON AND CEN­TUM CHAIR­MAN CHRIS KIRUBI LOOMS LARGE OVER CEN­TUM. IN FACT SOME OB­SERVERS SEE HIS IM­AGE AS BIG­GER THAN CEN­TUM. IS CEN­TUM BIG­GER THAN KIRUBI?

I have worked with Mr Kirubi for a long time. He has a big rep­u­ta­tion. He has a lot of ex­pe­ri­ence. Lead­er­ship is never about one per­son. In the world of ex­pe­ri­ence there are many fac­tors known or un­known that can af­fect busi­ness. CK (Chris Kirubi) has been a very good part­ner at the de­ci­sion mak­ing point. If you think about who is one of the most suc­cess­ful in­vestors of our time in this mar­ket, if you would say the top three, I’m sure Kirubi fea­tures there. If CK was not there I don’t think these suc­cesses I have been talk­ing about would have been pos­si­ble.

WHAT IS HIS FU­TURE AT CEN­TUM?

What hap­pens with time is that your suc­cess as a leader is to repli­cate your­self. To­day if you ask Kirubi the last time we saw things dif­fer­ently could be eight years ago. My con­clu­sion and his, in­de­pen­dently, will rarely be dif­fer­ent. His fu­ture is here. There is a bit of him now in all of us. So his fu­ture is here. He doesn’t need to come here, for what he would have done even if he is not here it is what ex­actly we would have done. And even­tu­ally even if I am not here, I would have left an im­print of me in the peo­ple I leave.

My fo­cus is take Cen­tum to a point where un­less there is a catas­tro­phe it is go­ing to re­main a strong or­gan­i­sa­tion in this econ­omy for a cen­tury”

YOU HAVE A DI­VERSE PORT­FO­LIO, WHAT IS THE PHI­LOS­O­PHY OF YOUR IN­VEST­MENTS?

When pick­ing the sec­tors we asked what the most press­ing is­sues in our re­gion are. Suc­cess­ful in­vest­ment is be­ing able to iden­tify the need cor­rectly and ad­dress it. The sec­tors we are in in­clude man­u­fac­ture of fast-mov­ing con­sumer goods, which has ended up to be a theme of the gov­ern­ment’s Big Four. We had iden­ti­fied fi­nan­cial ser­vices, man­u­fac­tur­ing, agri­cul­ture and real es­tate, which is cap­tured in af­ford­able hous­ing as well as in­fra­struc­ture. We are not look­ing at ad­di­tional sec­tors. We are stick­ing to our seven sec­tors be­cause the econ­omy has not moved to other sec­tors.

WHAT IS THE STA­TUS OF THE PRI­VATE EQ­UITY FUND YOU WANT TO LAUNCH?

It is work in progress. And re­ally the ob­jec­tive is not the fund. The ob­jec­tive is to gen­er­ate a su­pe­rior re­turn in our pri­vate eq­uity port­fo­lio. The fund is a means to an end. It is a means of pulling other peo­ple’s cap­i­tal to­gether so that we can in­vest in larger com­pa­nies that we on our own may not have ca­pac­ity to take sig­nif­i­cant risk in. Our key re­turn is from the com­pa­nies we in­vest in. The key thing in­vestors want is a track record. We have in­ter­est from in­vestors but also peo­ple want to in­vest with them.

WHAT IS THE STA­TUS OF OC­CU­PANCY AT TWO RIVERS MALL? It is cur­rently at around 70 per cent. WHAT IS THE STA­TUS OF YOUR LAMU COAL-FIRED POWER PLANT?

It is on­go­ing. It is largely driven by our part­ners in the im­ple­men­ta­tion, Gulf En­ergy. But that’s the na­ture of these projects, they take time.

CEN­TUM IN­VESTED MORE THAN SH3 BIL­LION TO AC­QUIRE A 77.1 PER CENT STAKE IN SIDIAN BY BUY­ING OUT FOUNDER SHARE­HOLD­ERS AND PAR­TIC­I­PAT­ING IN NEW CAP­I­TAL IN­JEC­TIONS MEANT TO STEADY THE LENDER. SIDIAN HAS BEEN MAK­ING LOSSES AMID LOAN DE­FAULTS. WHAT IS YOUR OUT­LOOK FOR THE LENDER?

It re­ported losses in 2018 but the fun­da­men­tals are im­prov­ing. Their de­posit book went up by more than 30 per cent. Their non-funded in­come has in­creased sig­nif­i­cantly.

WHAT IS YOUR OUT­LOOK FOR THE NEW YEAR?

It will be a good year.

--FILE

Cen­tum In­vest­ments CEO James Mwo­ria.

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