Why who you PARTNER with matters

August 9, 2019

a young investment professional in the African Continent, I was introduced to
an investment philosophy that guided
those who came before me. Expounding on each pillar
of the philosophy in a manner
that drives the point home will potentially need a book and whole lot of experience. So, I’ll
skip that part for now and try build up a story on one of the pillars of the investment philosophy that I am a 100% sold out to. The big word here is PARTNER!

It was a quarter
to 9am on Monday July 1, 2019.
We were finalizing our Monday
morning meeting at the Nabo Capital boardroom when Suki
Muia, an Investment Manager and Chairlady for the day informed us of the sad
demise of one of Kenya’s corporate titans that reverberated in the entire
Republic and beyond our borders.
Robert ‘Bob’ Collymore was no more.

One of the questions investors ask themselves as they appraise various investment opportunities is who they will be partnering with. Does the major shareholder meet their criteria of a credible and worthy partner? What about the Board of Directors and the Management Team? They even go further down the line and investigate who the other stakeholders are and question how effective they are. In this case, stakeholders could come in the form of suppliers, creditors and customers.

Bob’s first order of business after joining Safaricom PLC in November 2010 was to bring forth the Safaricom 2.0 corporate strategy that involved changing the company’s structure, culture and mindsets that focus on stakeholders who make up Safaricom’s ecosystem. By the time he was completing his full financial year at the helm of the Kenyan telco giant, the company had finalized its structural reorganization. The company now had a renewed focus on delivering superior customer service through 3 strategic business units namely; Consumer, Enterprise and Financial Services.

The result of pursuing what Collymore terms as the ‘purpose’ of the company has been phenomenal profits, a US$ 10 Billion valuation and an admired business partner & brand not only in Kenya but also across Africa. For an investor who was long Safaricom 8 years ago, bought into the story that they were partnering with a corporation that was focusing on what really matters for that type of business model; ensuring that the customer is well taken care of and that the members of staff had all the tools to execute.

Safaricom was recently ranked
as one of the most
admired brands in Africa by Brand Africa.
The telco was position
14 having improved
from position 17 in 2018
and 28 in 2017. If this tempo
continues, then the company
is expected to be among the top ten in the near term.

Even the bible
itself tells us in the book of Proverbs 18:22
that “He who
finds a wife
(in this case
‘good partner’) finds a good thing
and receives favor from the Lord”. Therefore, for one to truly enjoy the
fruits of prudent investments at any level and across
different asset classes
then one should treat
partner appraisal with the seriousness it deserves.

Indeed, the importance of this stage in the investment appraisal process is critical and cannot be emphasized further than that. The partnership will not only be an extension of one’s company, but you will also be able to understand your partner’s goals & check whether they are in line with yours and appraise the effects that the partnership will have on you.

Article by Rolly Kipkemoi – Investment Analyst Nabo Capital