A theory of biological evolution developed by Charles Darwin and others, states that all species of organisms arise and develop through the natural selection of small, inherited variations that increase the individual’s ability to compete, survive, and reproduce. It is also appropriately called the Darwinian Theory. It is a theory that divides opinion to date. Scientists lean towards it but religious leaders and their folk are against it. But in finding middle ground, we must all agree that evolution breeds competition, survival and reproduction.
In early 1998 a group of retired, middle aged women with their various sources of capital – savings and lump sums decide to form a group. Their primary goal? to save money and invest in ‘safe’ ventures so as to gain and not lose their money during their sunset years what is primarily known in financial circles as capital retention; and after the gains? As one of the members put it “tukule mandazi” (let’s eat doughnuts), an expression that meant they will enjoy their gains but keep the capital. They achieved their goals through simplicity. Members met in each others’ houses every month on weekends and discussed over lunch or 4 pm tea. Minutes would be taken and voting on major issues would be carried out. They made monthly contributions that were recorded on hardcover books through manual spreadsheets. Internal lending was created for members to borrow in times of need and return back the funds with ‘interest’ (a measly percentage that was their own way of unknowingly fighting inflation and preserving their net worth). So for these wise women survival was the goal. Later on, they would get involved in the capital markets in search of better gains. This year, this investment club turns 15 years old and is still going strong. I’m proud to say one of those wise women is my mother.
Fast forward to today and one of Kenya’s greatest investment club stories is listed on the Nairobi Securities Exchange. As investments folklore go, TransCentury Limited was conceived in one of the golf courses in Nairobi in 1995. Just like the wise women they had their individual sums and put their resources together. The difference lie in the type of investments they made. This time the types of investments required investment professionals and their advice. Aside from the ‘safe’ ventures, investing in companie,s public and private was also considered as they developed. Risk was a consideration and unlike the wise women they consciously sought to fight inflation through complex financial models and analysis. Because of the high risk involved they also seek high returns. Highly technical terms such as IRR (Internal Rate of Return), Net Present Value(NPV), while uncommon to the wise women are the jargon in such professionally run groups and companies
Today, Transcentury is a full-fledged holding company that has interests in energy, transport and infrastructure. It is run by a highly educated and experienced management team and a board full of business experience that steers the long term vision of the company. For Transcentury, they have evolved from their own initial goals of survival to being able to compete in the investment space, while their high returns during exits literally characterize Darwin’s assertion of reproduction.
From being called merry-go-rounds to investment groups/clubs/chamas? What next for these entities? Maybe more listings in the stock market? Private investments on a continental scale while searching for value? Mergers with other similar entities to create investment giants? Who knows? One thing is for sure though – Had Darwin’s theory applied to investment clubs, everybody would be in agreement.
Join the conversation, tell me your investment club stories…………………..Cheers!
Consult.Ed 