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S.Mutaga III
#1 Posted : Wednesday, August 06, 2014 9:10:18 PM
Rank: Member

Joined: 3/26/2012
Posts: 830
My friend and I are thinking of starting a small company where we will own some shares and seek other people to invest in the company and in return, they will get shares too according to their contribution. In addition, we intend to run it as a holding company whose sole purpose is to invest in other companies. Since investing in stocks both at nse and in the OTC market is largely passive, we will just have a small office for a start. After receiving the cash from the investors, we will invest the cash and charge a 2% management fee and a 20% performance fee on all profits after tax. 10% will be kept as cash reserves for the company and the rest distributed as dividends to shareholders. Is this kind of business allowed in Kenya? What are the requirements? Some guys showed some interest in investing with us and we coined the idea.
A successful man is not he who gets the best, it is he who makes the best from what he gets.
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  | | Edit by user: Wednesday, August 06, 2014 9:11 PM | Reason: Not specified
The optimist
#2 Posted : Wednesday, August 06, 2014 9:51:15 PM
Rank: Member

Joined: 6/14/2010
Posts: 521
Location: Nairobi
S.Mutaga III wrote:
My friend and I are thinking of starting a small company where we will own some shares and seek other people to invest in the company and in return, they will get shares too according to their contribution. In addition, we intend to run it as a holding company whose sole purpose is to invest in other companies. Since investing in stocks both at nse and in the OTC market is largely passive, we will just have a small office for a start. After receiving the cash from the investors, we will invest the cash and charge a 2% management fee and a 20% performance fee on all profits after tax. 10% will be kept as cash reserves for the company and the rest distributed as dividends to shareholders. Is this kind of business allowed in Kenya? What are the requirements? Some guys showed some interest in investing with us and we coined the idea.

Following..
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Chaka
#3 Posted : Wednesday, August 06, 2014 10:25:31 PM
Rank: Elder

Joined: 2/16/2007
Posts: 2,114
What will happen should the Co make losses?Will you pay the shareholders an underperformance fee?
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Mart_Consult
#4 Posted : Wednesday, August 06, 2014 10:29:10 PM
Rank: Member

Joined: 11/7/2013
Posts: 127
Location: Nairobi, Kenya
S.Mutaga III wrote:
My friend and I are thinking of starting a small company where we will own some shares and seek other people to invest in the company and in return, they will get shares too according to their contribution. In addition, we intend to run it as a holding company whose sole purpose is to invest in other companies. Since investing in stocks both at nse and in the OTC market is largely passive, we will just have a small office for a start. After receiving the cash from the investors, we will invest the cash and charge a 2% management fee and a 20% performance fee on all profits after tax. 10% will be kept as cash reserves for the company and the rest distributed as dividends to shareholders. Is this kind of business allowed in Kenya? What are the requirements? Some guys showed some interest in investing with us and we coined the idea.


Great idea...but wait...the devil's in the detail...let's take a look...

1. So will you be the major shareholders and thus main contributors to this company?

2. How long, if ever, have you worked with this friend?

3. The investors shall thus be passive. What's your track record in this private equity sort of business? Why should I, for instance, believe in you(r) (company)?? On a side note though, good picks in the 2014 thread...

4. So there will be no salaries for you both and remuneration only based on performance? What's plan B if a terrible financial year comes by for these subsidiaries/ associate firms?

5. Only a 10% cash retention policy...heh, even if you want to entice investors with high returns...keep some (more) Kshs. for other investments...and a bad day is always somehow around the corner...as of writing this two days ago, Berkshire Hathaway reported their H1Y14 earnings with 55 Billion USD in cash balances...looking for acquistions...

6. Finally, are you looking to invest in existing enterprises, startups, acquistions etc etc...each has its level of stability and return...investors need finer detail (I believe even potential ones here on Wazua)...

Well, as a sort of PE fund or Company read more on Kenya's first indigenous firm...Ascent or Ascend Capital (either not too sure, might be confusing the phone and fund's names!)

Ze best...!
I went into the (Ferry) industry knowing the same thing I knew with all other businesses I went into- Nothing. Then I built it from there. - Sheldon Adelson (Titans at the Table- Giants of Macau)
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S.Mutaga III
#5 Posted : Thursday, August 07, 2014 9:10:38 AM
Rank: Member

Joined: 3/26/2012
Posts: 830
Mart_Consult wrote:
S.Mutaga III wrote:
My friend and I are thinking of starting a small company where we will own some shares and seek other people to invest in the company and in return, they will get shares too according to their contribution. In addition, we intend to run it as a holding company whose sole purpose is to invest in other companies. Since investing in stocks both at nse and in the OTC market is largely passive, we will just have a small office for a start. After receiving the cash from the investors, we will invest the cash and charge a 2% management fee and a 20% performance fee on all profits after tax. 10% will be kept as cash reserves for the company and the rest distributed as dividends to shareholders. Is this kind of business allowed in Kenya? What are the requirements? Some guys showed some interest in investing with us and we coined the idea.


Great idea...but wait...the devil's in the detail...let's take a look...

1. So will you be the major shareholders and thus main contributors to this company?

2. How long, if ever, have you worked with this friend?

3. The investors shall thus be passive. What's your track record in this private equity sort of business? Why should I, for instance, believe in you(r) (company)?? On a side note though, good picks in the 2014 thread...

4. So there will be no salaries for you both and remuneration only based on performance? What's plan B if a terrible financial year comes by for these subsidiaries/ associate firms?

5. Only a 10% cash retention policy...heh, even if you want to entice investors with high returns...keep some (more) Kshs. for other investments...and a bad day is always somehow around the corner...as of writing this two days ago, Berkshire Hathaway reported their H1Y14 earnings with 55 Billion USD in cash balances...looking for acquistions...

6. Finally, are you looking to invest in existing enterprises, startups, acquistions etc etc...each has its level of stability and return...investors need finer detail (I believe even potential ones here on Wazua)...

Well, as a sort of PE fund or Company read more on Kenya's first indigenous firm...Ascent or Ascend Capital (either not too sure, might be confusing the phone and fund's names!)

Ze best...!


We explained to some fat cats what we do and they asked whether they could invest maybe one million each for a period of two years and then from that they would evaluate the performance and know whether to terminate our services or continue using them. We wanted to know whether this type of business arrangement is legal because it is like a hedge fund with regard to remuneration. 2% management fee and 20% performance fees. We think it may be a good idea so that we can build a track record and perhaps become a hedge fund in future and get institutional clients.
A successful man is not he who gets the best, it is he who makes the best from what he gets.
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Ash Ock
#6 Posted : Thursday, August 07, 2014 12:01:15 PM
Rank: Member

Joined: 8/27/2010
Posts: 495
Location: Nairobi
S.Mutaga III wrote:

We explained to some fat cats what we do and they asked whether they could invest maybe one million each for a period of two years and then from that they would evaluate the performance and know whether to terminate our services or continue using them. We wanted to know whether this type of business arrangement is legal because it is like a hedge fund with regard to remuneration. 2% management fee and 20% performance fees. We think it may be a good idea so that we can build a track record and perhaps become a hedge fund in future and get institutional clients.


Interested.

Following...
Sent from my Black Nokia 3310
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accelriskconsult
#7 Posted : Thursday, August 07, 2014 12:37:45 PM
Rank: Member

Joined: 4/2/2011
Posts: 629
Location: Nai
1. S Mutaga there is no basis for retaining reserves in a hedge fund.

Whose money would you put in that reserve?

2. Justifying a management fee of more than 1% on contributions is a hard sell

3. Is there a hurdle rate below which you get no performance fee? How else would investors be sure that you are putting your best foot forward to generate returns?
4. How will you deal with the problem of having a very limited number of investments?
5. What is your track record and how much of your own money will you be risking?
6. Will the legal form of the entity be a Limited Liability Partnership or a Ltd Company?
7. Hedge funds operating with over USD 5 billion are at times run by no more that 2 people, why would you want to hire staff when there is you and a partner?
8. Are you familiar with the equalization and the serialization methods used to account for investors funds? If not, how will you overcome that challenge?
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ChumsQuest
#8 Posted : Friday, August 29, 2014 3:58:06 AM
Rank: Member

Joined: 1/24/2013
Posts: 325
accelriskconsult wrote:
1. S Mutaga there is no basis for retaining reserves in a hedge fund.

Whose money would you put in that reserve?

2. Justifying a management fee of more than 1% on contributions is a hard sell

3. Is there a hurdle rate below which you get no performance fee? How else would investors be sure that you are putting your best foot forward to generate returns?
4. How will you deal with the problem of having a very limited number of investments?
5. What is your track record and how much of your own money will you be risking?
6. Will the legal form of the entity be a Limited Liability Partnership or a Ltd Company?
7. Hedge funds operating with over USD 5 billion are at times run by no more that 2 people, why would you want to hire staff when there is you and a partner?
8. Are you familiar with the equalization and the serialization methods used to account for investors funds? If not, how will you overcome that challenge?







Wololololo...where's @Mawinder?
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Malik-A
#9 Posted : Tuesday, September 23, 2014 10:23:21 AM
Rank: Hello

Joined: 9/23/2014
Posts: 1
Seems like a hedge fund BM. Following...
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mugz
#10 Posted : Thursday, November 06, 2014 12:49:36 PM
Rank: Member

Joined: 1/31/2007
Posts: 26
following...
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