CMA Grants African Diaspora Asset Managers a License

Capital Markets Authority Reviews Collective Investment Schemes Framework

African Diaspora Asset Managers Limited has been granted a fund manager’s license by the Capital Markets Authority (CMA).

In a statement on Friday, CMA said the fund manager will offer financial products in asset management, unit trusts, financial investment management, discretionary portfolio management among other services. 

‘The asset management sector is an important component of capital markets. Some products offered by fund managers, for instance, collective investment schemes, are important because they provide an opportunity for small investors to have access to professionally managed, diversified portfolios of assets,” CMA Acting CEO Wyckliffe Shamiah said.

African Diaspora Asset Managers Limited will target Kenyan and other African clients living abroad as well as adopting an ambitious pan-African investment strategy for diversification and return enhancement.

African Diaspora Asset Managers Limited Chief Executive Officer Mr. Runyah Lewa noted that his firm is interested in collective investment schemes that will initially comprise five funds, subject to the Capital Markets Authority’s consent and subsequent registration.

The proposed schemes are:  ADAM Money Market Fund, ADAM Fixed Income Fund, ADAM Equities Fund, ADAM Property Fund and ADAM Business Growth Fund. 

The latter will be a Private Equity Fund specifically seeking to provide debt and equity capital for SMEs in Kenya and Africa.

“This is a very important development to see capital markets focused on financing businesses given the current absence in capital market funding for businesses,” commented Cytonn Investments.

According to the World Bank, capital markets make up 60.0% of funding for businesses, with the balance of 40.0% coming from bank funding. In Kenya, bank funding makes up 95.0% of business funding, with only 5.0% coming from the capital market, due to the dominance by banks and the stifled capital markets.

“Following the licensing of ADAM, the total number of licensed fund managers will be 25. As at Q1’2020, there were 24 approved Collective Investment Schemes made up of 92 funds in Kenya. Out of the 24 however, only 19 were active while 5 were inactive. Given that the fund manager also seeks to target foreign investors, we believe that this will be a value addition to the clients most especially those seeking to invest in the Kenyan market. Additionally, this may also lead to an improvement in Kenya’s Foreign Direct Investment which stood at 115.1 bn in 2019,” Cytonn adds.