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5 Ways to Make Your Family Business Successful


Family businesses may be popular, but that doesn't mean they're all successful: The reality is that the majority of family-run businesses don't last past the first generation.


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Mhasibu Investment Company Limited
Mhasibu Investment Company Limited or MICL has been a member of KAIG since 2007. “Mhasibu” means an accountant in Swahili, MICL was actually started by members of the Mhasibu Sacco society.  The formation of the Sacco from which MICL was derived was spearheaded by members of the institute of certified public accountants of Kenya (ICPAK). The Sacco  was founded  in 1986 with only  37members on board ,its  sole purpose was to lend money and they were only allowed to invest 20% of the surplus but  this become untenable  as the Sacco was completely dependent  on the surplus income  from loans. 
It is for this reason the members decided it was important to explore other investment options by pooling resources together and hence the birth of Mhasibu Investment Company Limited (MICL).
 MICL was founded and registered in 1997 as a limited company and has since grown to 250 shareholders. It was started to take advantage of the then high yield of returns on treasury bills and bonds but has since diverted from fixed income to higher return investments for example  in private equity, real estate and offshore investments. The share capital has grown more than 20 times from December 1997 to 2009.At the beginning the members opted to turn into capital for MICL the dividends they had received from the Sacco. There are currently no monthly contributions as at December 2007 but initially the members could contribute up to a minimum of Kes 1000, the company has now focused on growing the asset base by leveraging on their assets and re-investing earnings. The group has also established an Over the Counter facility (OTC) to enable shareholders trade in their shares.
Operations for Mhasibu are run by the secretariat who report to the board of directors. The board constitutes very competent, respected and qualified individuals in their respective professions in various corporate sectors .All investment decisions are entrusted to the board, who have various committees set up to handle investments in equities(both private and listed) and real estate.  The board meets every quarter while the shareholders meet during the Annual General meeting, shareholders’ cocktails and when necessary for shareholders’ Extra Ordinary meetings. The different committees are however very active and meet as many times as need be. This they say ensures that investment decisions are made on a timely basis. Their goal is to provide the shareholders with above market returns while managing risk on their portfolio.
The current asset value of the group stands at Kes 77million and this has mainly been invested in private equity, listed equities, money market, real estate and offshore investment, with private equity investment taking up a higher percentage. MICL has a 5year strategic plan which is reviewed annually.
“Inconsistency in contributions was a major challenge in MICL “says Mr. Michael Matimu, an accountant by profession, “hence you cannot be able to plan. The share capital was also very little in the beginning so we did not know where to invest our money”, He adds. But this is a thing of the past now as they were able to get financing from selected banks.
Just like any other group there was slow growth initially due to lack of information as far as investment is concerned. Decision making was a slow process but this has since been dealt with by establishing different board committees.
The company having been formed by a group of accountants meant that members were not willing to take up higher risk opportunities but this changed with the groups’ realization that investments with higher risks yielded better returns. True to the saying they have come a long way from their initial investment.
Record keeping was a bit of an issue. Initially this function was carried out by the Sacco but proved problematic as it was not possible to issue shareholders with their statements but this was  been streamlined by establishing a perfect online record keeping system an achievement  that Mr. Matimu prides himself in.
Mhasibu has an aggressive but prudent investment strategy. They pride themselves in having a well experienced board of directors that has driven the company’s growth.
The company’s secretariat was also put in place 2007 to run the company’s operations and ensure regular communication with the board as well as to shareholders and also to analyze potential investment opportunities. The shareholders are informed of their investments through a newsletter that is sent to them quarterly.
The greatest achievement has so far been the growth of their meager share capital of Kshs.2.6million to a whopping Kes 77million. Shareholders have also been able to realize capital gains on their investment through the company’s share transfer facility.
In addition the company prides itself with maintaining a balanced portfolio, therefore is able to pay dividends to shareholders yearly, and ensures liquidity of shareholders’ investment through the share transfer facility.
Shareholders have also been able to use their shares as collateral for loans from Mhasibu Sacco and other lenders, and also benefit from the varied ‘investor forums organized by KAIG, “We have been Members since KIAG’s inception”, Says Rehema Jebi, the company’s administrator. “Our KAIG Membership gives our shareholders a chance to learn and network with other groups, share ideas and therefore better understand their company’s investment strategy and objectives.”
Lessons for other groups
“For an investment group to succeed they should be able to make timely investment decisions, focus on the group’s investment strategy and have competent leadership”, Says Rehema. Objectives should be clearly defined and a definite time frame set so that they are achieved. An investment group should also be able review their investments regularly and keep up to date on developments in the economy to be able to ride these economic changes.
 “What makes Mhasibu very distinctive from other groups is the fact that 95pc of our members are accountants hence they are like minded, well informed as far as financial matters are concerned and clearly nobody can play around with their money“jokes Mr. Matimu.
The company aspires to be listed at the NSE and continue growing their company assets to more than a billion shillings.
 We wish them all the very best.
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