I missed my copy of the Nations Smart Magazine and happened to flip through it while at the Ihub late this afternoon working on the Moca and Tuvitu payment integration with team Tuvitu and Team Shimba. Flipping through I see the headline – Young deal makers take on the old boys, and was pleasantly surprised to see Wilson Irungu, my classmate at the Starehe Institute Class of 2002 featured. Here is the story as appeared in the Smart Company on Tue 28, September 2010.
As far as deal making goes, advising companies seeking to list or raise capital at the stock market has been a game for the chosen few.
An “old boys club” controlled every aspect of the market.
But the entry of commercial banks is collapsing the old boys network and letting in ambitious and intelligent young minds.
They are coming in the likes of Wilson Irungu Nyakera, who at 27 rose to head NIC Capital Investment Bank as the general manager.
Now at 28, Mr Nyakera is leading his team to help Housing Finance raise Sh10 billion, the second largest corporate bond in the Kenyan market. The mortgage financier will raise the money in three tranches with the debut issue of Sh5 billion already in progress. The issue is jointly arranged by NIC Capital and Standard Chattered Bank of Kenya.
For a man with a degree in financial analysis and decision engineering from Stanford University in the US, it is easy to mistake his roots.
Born to peasant farmer in Murang’a, luck kicked in for the first born in a family of three when he got a sponsor who put him in Starehe Boys’ Centre, joining at class two and graduating in 2000 at position 32 overall in KCSE.
He joined NIC Capital as senior associate in February 2009, from Citigroup Global Markets where he worked in London as financial analyst for emerging markets.
He had joined Citi in July 2006 working at the multinational’s New York Offices for three months as summer analyst before moving to London.
He became the NIC Capital General Manager late last year after being elevated from deputy general manager. His biggest break came in September 2009 when Mr Pradeep Paunrana, Athi River Mining managing director, cancelled instructions his company had issued to an international investment bank and convinced his board to give the project to a 27-year old.
The cement maker was seeking Sh1.2 billion to complete a $100 million (Sh800 million) cement plant in Tanga, Tanzania, due for completion in 2011. And being his first deal, it took him eight months to stitch it together.
The eight months was time well spent, giving Kenya the first equity-linked bond. An equity-linked note offers investors higher returns in the event the firm’s shares perform well.
Athi River’s note offered a 12 per cent coupon with a rise in the share price envisaged to raise the yield to a total of 16 per cent. A month later the market rewarded his effort with a 58 per cent oversubscription after investors placed bids worth Sh1.9 billion against Sh1.2 billion.
“We were all new and young. We did not have clouts to pull deals and relied much on personal connections,” says Mr Nyakera. He, however, says having a big name of NIC Bank helped. “With no track record it was important to have a parent like NIC Bank, who are well known in the market,” Mr Nyakera says.
NIC Capital has seven deals since April valued at about Sh14.4 billion as transaction adviser – three completed and four ongoing. The Investment Bank has been retained as a placement agent in scouting for lenders for a $30 billion (Sh2.4 trillion) syndicated loan for an LPG facility.
This has increased revenue form advisory services from Sh100,000 in the first six months to June 2009 to Sh19.6 million this year.
Over the same period, profit after tax has also improved by 208 per cent from a Sh7.7 million after tax loss to Sh8.3 million after tax profit.
The Housing Finance Sh10 billion bond is the investment bank’s biggest single issue to handle in its four-year history. It sheer size meant that they had to look for a partner in Standard Chartered Bank.
“It is a way of strategising on how to win,” says Mr Nyakera.
Also it is the second biggest corporate bond in Kenya’s history after the Sh25 billion KenGen Infrastructure bond concluded in September last year.