Dyer and Blair chairman Jimnah Mbaru. He has had to take the helm after
the exit of key staff, which has seen the firm’s turnover drop
drastically. PHOTO | DIANA NGILA
By GEORGE NGIGI, gngigi@ke.nationmedia.com
In Summary
- Dyer and Blair has lost nearly half its bond market share after losing some of its senior staff and dealers.
- Its market share shrink to 16.7 per cent in the nine months to September from 30.1 per cent in a similar period last year. It had stood at 19.7 per cent in June this year.
- Talent wars in the lucrative bond market have been common given the relationship-based nature of the business, which often means when brokers and analysts move, they take the business and clients with them.
Dyer and Blair has lost nearly half its bond market share after losing some of its senior staff and dealers.
The investment bank, associated with wealthy investor Jimnah
Mbaru, saw its market share shrink to 16.7 per cent in the nine months
to September from 30.1 per cent in a similar period last year. It had
stood at 19.7 per cent in June this year.
The latter figure represented Sh77 billion turnover against previous Sh200.5 billion for Mr Mbaru’s firm.
Mr Mbaru was forced to take the helm again at Dyer
following the exit of chief executive Paul Orem and his deputy Paul
Nyagah in August. The investment bank also lost its top dealers at the
fixed income desk, Norris Kibe and Gibson Gichaga, to Faida Investments
in July.
“We don’t have a bond team now,” said the
billionaire but declined to disclose whether they were hunting for
dealers. “We will let you know when we get there.”
In September Dyer traded bonds worth Sh990,642, an insignificant amount in the multibillion-shilling business.
Talent wars in the lucrative bond market have been
common given the relationship-based nature of the business, which often
means when brokers and analysts move, they take the business and clients
with them.
Kestrel Capital leap-frogged Dyer to the top of the
pile with control of 23.5 per cent of the market, up from 18.5 per
cent, a year earlier.
The rise of Kestrel Capital follows its poaching of
staff Alex Muiruri and Mathangani Kariuki from competitor African
Alliance last year.
Turnover in the bonds market shrunk by Sh199
billion to Sh467 billion this year compared to Sh666 billion in
September last year.
The slowdown has been attributed to rise in
interest rates making most of the bonds currently held lose value. Bond
value has an inverse relationship with interest rates, with the value of
the bond in the secondary market falling as interest rates rise. This
is because investors would prefer to buy better yielding bonds from the
primary market.
Top performers
The drop in turnover is expected to hit stockbroker
earnings as they earn a commission of 0.035 per cent on exchange (buying
and selling), complementing commissions from equities.
Other top performers in the bond market include SBG
Securities which ranked third with 11.68 per cent market share followed
by Standard Investment Bank, 9.9 per cent and Faida at 8.4 per cent.
The indicative 91-day Treasury bill is currently
yielding 19.5 per cent up from 13.9 per cent in September and 8.5 per
cent in January.
The Treasury was forced to increase its return
offering for the government papers following a biting cash crunch
resulting from revenues lagging expenditure.
Brokers interviewed by the Business Daily expect the Treasury to remain active in the local market despite getting a Sh75 billion syndicated loan last week.
“The Treasury will have to look at numbers in the
supplementary budget before reviewing its targeted borrowing; they don’t
want to give hope and then following the mini budget they come back to
the market,” said a top fixed income dealer who sought anonymity so as
to talk freely.
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