Meet Kenya’s top deal maker-The banker behind deals worth Sh860b
When he talks, he does so with a stutter, but anyone who has faced him at the negotiating table will tell you this does not get in the way of making that crucial point that clinches the deal.
John Ngumi, a seasoned investment banker who has had a hand in a web of mega financial deals spanning the continent and beyond, is astute and inventive in business decisions.
When Financial Standard caught up with him at Westhoods Place, Westlands, Ngumi, now the Ccairman of State-owned Kenya Pipeline Company (KPC), was dressed down – at least from the basic grooming expected from an investment banker.
“I answer every question no matter how embarrassing it is. I stammer, yes. I fought for three years to keep auctioneers off my property, yes. I was in business and it went bad, yes. But so what?” he started off.
Away from his personal struggles, he has brokered mega financial deals running in excess of $8.6 billion (Sh860 billion) over the years he spent in the banking sector.
Working at KPC now means he no longer brokers such deals anymore, but the investment banker in him still retains a nose for a good deal.
“I cannot do any private deal in the oil and gas industry yet I see a number of deals. I can smell them. This pipeline will cost billions of dollars. I would love to be the man to raise the money,” he says gazing at the open window as though to already visualises the pipeline.
Scaling the Africa landscape as a dealmaker is no easy feat.
Yes, you need to be good in math and spreadsheet-modeling wizardry. Besides, one needs to be tolerant and working long hours to close the job.
But that alone won’t get you far. The business is all about building relationships and navigating personalities — those of your clients and of your firm. These skills are more nebulous and can take many years to cultivate. That’s why it’s such an impressive feat to be sourcing and executing serious investment-banking transactions in a difficult environment that is changing by the day.
However, on this warm afternoon, he has ditched his tie and dapper suit synonymous with many investment bankers or members of crucial boards such as KPC. Seated in the boardroom, he wants to back up every word with evidence, in his own words, he rarely takes back what he says.
This, therefore, means this writer has to be patient as he assembles what he considers crucial evidence to prove everything he says – a calculator to reconfirm figures, laptop to prove links to key information and carefully bound documents to ensure coherent timelines.
He is the man who has earned many firsts, more than his prudently summarised five-page CV can reveal.
Born in October 1955, Ngumi has been instrumental in many landmark multi-sectoral deals in East Africa.
He is daring. “It takes a lot of guts to raise money. In 2014, I told Mo Ibrahim that if I didn’t raise $10 million (Sh1 billion) for him, he would receive a copy of my resignation letter,” he says of one of the deals he has successfully brokered.
His career started in 1980 as a trainee at the National Westminster Bank Plc in London. Other banks such as Grindlays Bank International, Citibank, Barclays Bank and Standard Bank later found him a crucial deal-maker for their business. Many companies, including Safaricom, which elbowed Airtel Kenya (then Celtel) to become the market leader in the telecommunications sector, largely raised money through him.
Sourcing for money, the 1979 first class honours graduate in Philosophy, Politics and Economics from Oxford University says, was borne out of his overriding goal to see Africa “freed from economic hopelessness.”
From 1996 when he was part of Treasury team that drafted legislation to govern venture capital funds and 1998 when he was part of the team that revised Capital Markets Authority Act, Ngumi’s name has kept popping up in the regional financial space.
Having worked at Standard Bank Group, Stanbic Bank for 11 years, his name has always been synonymous with big deals. He was too attached to the art of deal-making that up to date, he says when he looks around, he still sees deals that he could seal and earn an arrangement fee, except that he is out of trade now.
When President Uhuru Kenyatta approached him to become KPC chairman, he was no stranger at the 41-year old corporation. In January 2010, then heading investment banking in East Africa for Standard Bank Africa, Ngumi was the joint lead arranger for KPC’s $84 million (Sh8.4 billion) medium-term syndicated loan.
It became the largest ever non-government guaranteed commercial bank financing to a State-owned enterprise in Kenya. Five years later when the President came calling, he knew retaining his old job would pose a conflict of interest.
He had to quit Standard Bank Group, which was trading in East African region as Stanbic Bank.
KPC was already a client of Stanbic Bank, with Ngumi having done a deal for them in 2010. He told Financial Standard that Uhuru’s request “equalled to him going to chair the board of a client.” In addition, KPC main customers such as Vivo, Total and Oilibya were also Stanbic customers.
He was afraid that those customers would see him as a banker as well as the chairman of their service provider. At that time, he was also in the middle of leading a consortium of banks to raise $350 million (Sh35 billion) to finance KPC’s new line dubbed line V.
Up to April, he had negotiated with KPC as the lead member of a consortium of six banks. “We were putting together the deal which we were about to sign in June 2015. That was the third conflict of interest,” he says.
This meant that he had a choice to either reject Uhuru’s offer or quit being a merchant banker and head to the public sector. He took the latter, sacrificing what he described as a multi-million-shilling pay package.
The trail of deals he spawned, led and closed span over three decades in many firms and governments in Kenya, Uganda and Tanzania. In 2014, he was at the scene when Kenya tapped into the international market for its debut $2 billion (Sh200 billion) Eurobond issue which was subsequently increased to Sh275 billion via a tap sale.
Working for Standard Bank Plc, he was a joint lead arranger alongside Barclays Bank Plc, JP Morgan and Qatar National Bank that led to the oversubscribed bond that made history as the largest debut bond for an African country in the sovereign bond market.
Despite the allegations that its proceeds were misused, Ngumi, who was also the spokesperson for all the four banks, believes that his team did an “excellent job” in mobilising the resources.
Many crucial emails during the arranging of the bond were under his name, a role that saw him become a person of interest when Ethics and Anti-Corruption Commission wanted to understand how Eurobonds work and how they are priced.
However, he feels the government failed to communicate clearly on how the proceeds of the bond were used but instead resorted to a political ploy of trying to point at specific projects done by the bond.
“It was so perplexing to me how the government got itself into such a complicated situation. I felt it could have explained itself better,” says Ngumi.
He adds that since the proceeds were for general budgetary support and infrastructure projects, it was a complicated exercise since no specific projects had been earmarked to be developed exclusively by the bond.
Ngumi considers the Eurobond among the most memorable in the many deals he has been involved since it introduced Kenya to the international capital market. The bond came on the back of a 2012 two-year syndicated loan of $600 million (Sh60 billion) that Kenya borrowed to fund development projects. Again, he was the joint mandated lead arranger for the debut syndicated loan.
Despite having brokered deals worth billions of shillings, he says his crowning moment was the April 2005 deal by Faulu Kenya.
He was the sole arranger of $5 million (Sh500 million) medium-term note issue. This remains the only ever bond issue for a microfinance entity in Africa.
According to Ngumi, before raising the money, Faulu’s average cost of lending was about 33 per cent.
This dropped to 18 per cent after the bond. “I am very proud of that. That is the single most important deal for me. It is a shame that we have never followed up with any other issue,” he says.
Regionally, Ngumi was also involved in deals in Tanzania. He was the sole arranger of Tanzania’s $250 million (Sh25 billion) syndicated loan in 2011.
The deal was also historic since it was the first time for the country to access the international capital market on a commercial basis. He negotiated for a fee of 1.4 per cent. This means the deal earned Standard Bank about $3.5 million or Sh350 million.
But that was not the first time to broker a deal in Tanzania. In October 2006, he was the sole arranger of Tanzania Electricity Supply Company Ltd’s $40 million (Sh40 billion) bridge facility.
At the time, he was serving as the director of investment banking in East Africa reporting to the head of investment banking at Standard Bank Africa in Johannesburg as well as Stanbic Bank Managing Directors in Kenya, Uganda and Tanzania.
Syndicated term loan
He served in the position between June 2005 and March 2008. He was back again in August 2007 as the sole arranger for the same company’s $107 million (Sh10.7 billion) syndicated term loan.
The deal was voted as the deal of the year by The Banker Magazine, a 1962-founded monthly international financial affairs publication owned by The Financial Times.
In November 2009, he followed it up as their sole arranger of $29 million (Sh2.9 billion) medium-term syndicated loan. About a year earlier in February 2008, he was also the joint lead arranger when Celtel Tanzania Ltd (now Airtel Tanzania) raised $270 million (Sh27 billion) through a syndicated term loan. To date, this remains the largest ever corporate financing in Tanzania.
By this time, he was not new to the telco. He had also dealt with the firm in June 2006 as a global advisor and joint lead arranger in a $45 million (Sh4.5 billion) medium-term syndicated loan facility. At the time, it became Tanzania’s largest ever corporate loan.
It was voted the deal of the year by Africa Investor Magazine, a news journal for investment decision-makers. The deal saw Standard Bank voted as the Bank of the Year by Euromoney, a monthly magazine focused on business and finance.
Back at home, Ngumi has had a hand in key government and private firms, helping them to attract funding. In 1989, he was the sole planner who helped the government to put $26 million (Sh2.6 billion) medium-term certificates on the New York Stock Exchange.
This was Kenya’s first-ever securities’ issuance in the international capital market. He was the assistant vice president and head of liability management and capital markets at Citibank NA. He served in this position between 1985 and 1989.
Little wonder then that in 1997, Ngumi worked with Central Bank of Kenya in structuring a listed Treasury bond programme that helped shape the bond market in the country.
But by that time, he had founded Loita Capital Partners Group, where he served as founding executive director from 1994 to 1997. The group comprised of Loita Asset Management (LAM) and Loita Capital Partners Ltd.
LAM became the second asset manager in Kenya after Barclays Bank with an asset base of Sh3.8 billion. The firm, however, eventually went under.
He remained in the market as an independent investment banker even as auctioneers came calling.
“If you are a banker who has never lost or come near to losing the money, then you have not taken a risk,” he says. In 2001, serving as vice president and assistant general manager for public sector and corporate finance at Citibank NA, Ngumi was the sole arranger of the note guarantee and joint lead manager for Safaricom’s $40 million (Sh4 billion) bond issue.
This became the largest ever corporate bond issue in Kenya at that time. It was selected as the African Telecom deal of the year by Project Finance, a global magazine for project and infrastructure finance. Ngumi said this was his second most important deal.
He observed that this was the deal that helped Safaricom overtake Celtel, now Airtel, by going to the skeptical capital market to raise money for infrastructure development.
“At that time, Safaricom had about 16,000 subscribers. It was very hard to convince people but we made it. I regard that as one of the pillars for the success of Safaricom,” he said.
He attributes the Loita failure to inability to focus and control the expenses after he and co-founders chose a lavish life. He believes the architecture of Kenya’s financial markets today owes a great deal to what his team did at Loita.
As he enters his second term as KPC chair, he cherishes the memories of over 30 years of deal hunting. Without it, he says he would have been “so bored