An agreement providing for the restructuring and expansion of the activities of the Diamond Trust of Kenya Limited (DTK) into the field of merchant banking was signed on 30 July, 1982 at Aiglemont, the Aga Khan's Secretariat near Paris, by DTK, the International Finance Corporation (IFC) and Samuel Montagu and Co. Limited.
His Highness the Aga Khan, who has had a long and close association with the company, was present at the signing ceremony attended by His Excellency Mr. John Kimani, Kenya's Ambassador to France.
Under the terms of the agreement, the new subscription by IFC and Samuel Montagu will amount to just over K.Shs. 20 million. This subscription will be made in foreign currency.
The Diamond Trust of Kenya was incorporated in Kenya in 1965 and is one of the country's leading financial institutions and is preeminent in the field of finance in which it has been engaged up to the present. Its share are quoted on the Nairobi Stock Exchange, and its assets are in excess of K.Shs. 500 million.
DTK's issue and subscribed capital has, over the last three years, risen from Shs. 10 million to the present level of Shs. 25 million through several issues of bonus shares. The dividend rate is currently 35 per cent per annum, but to mark the occasion of the entry of the new shareholders, the directors of DTK are proposing that an additional special dividend of 15 per cent should be declared in the current year.
DTK's predecessor, the Diamond Jubilee Investment Trust, dates back to 1946 and the time of the Diamond Jubilee of the present Aga Khan's grandfather, Sir Sultan Mahomed Shah, who, together with members of the Ismaili community in East Africa, marked the occasion by establishing a financial institution to promote economic development. Today, the company has over 8,000 Kenyan shareholders. It is something of a coincidence that an institution dating back to the Diamond Jubilee of his grandfather should be subject of a major restructuring and expansion in the year that the present Aga Khan marks the Silver Jubilee of his own accession to the Imamat of the Shia Imami Ismaili Muslims.
In its new and expanded role, the Diamond Trust of Kenya will develop, in addition to its leasing and hire-purchase activities, a full range of merchant banking services, including loan and project financing, underwriting, portfolio management, money market activities and the provision of corporate financial and advisory services. In this manner, DTK will seek to make a significant contribution to the Kenya Government's desire to achieve an orderly development of the country's financial and capital markets.
The International Finance Corporation, an affiliate of the World Bank, was established in 1956 to promote economic development in the developing world through the encouragement of investment in the private sector. The DTK project is one of a number in which IFC and the Aga Khan are associated in Africa and Asia, the others being in the fields of tourism, housing finance, venture capital and industrial development.
Samuel Montagu, a leading merchant bank in the City of London, is a wholly-owned subsidiary of the Midland Bank Limited. The company has operations in the Middle East, Far East and South America, as well as Europe and North America. The bank has recently been appointed as financial advisers to the Zambian Government. Their involvement in Diamond Trust will be their first investment in Africa and they will also provide technical assistance to facilitate DTK's broadening of its merchant banking activities.
In the agreement, provision has also been made for the two other institutional shareholders to participate in the equity of the Diamond Trust in the near future. The United Nations Joint Staff Pension Fund expects, in line with its policy of seeking suitable investment opportunities in the developing world, to be in a position to invest in DTK, and this will have the distinction of being the Fund's first equity investment in Africa. The ICDC investment company, a subsidiary of the Government-owned Industrial and Commercial Development Corporation, which is quoted on the Nairobi Stock Exchange, is also expected to take an equity interest in the company in the next year or so.
The agreement was signed for IFC by the Corporation's Executive Vice President, Mr. Hans Wuttke, for Samuel Montagu by the Chairman, Mr. Staffan Gadd, and for the Diamond Trust of Kenya by the Chairman, Mr. Sultan Shariff.
Source: Africa Ismaili
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