Nico Asset Managers Distances Itself from Amaryllis Hotel Deal, Tells PAC It Warned of Risks
Fresh revelations before Parliament’s oversight committee have cast further scrutiny on the controversial acquisition of the Amaryllis Hotel by the Public Service Pension Trust Fund (PSPTF), after Nico Asset Managers Limited disclosed that it had strongly advised against the transaction.
Appearing before the Public Accounts Committee (PAC), Nico Asset Managers Chief Executive Officer Daniel Dunga told lawmakers that his firm had formally warned the Public Service Pension Trust Fund (PSPTF) that acquiring 100 percent of the Amaryllis Hotel posed significant financial risks to the pension fund.
Dunga explained that Nico Asset Managers, which served as an investment advisor to the pension fund, recommended a more cautious investment approach after reviewing the proposed acquisition in 2023. According to him, the firm’s analysis raised several critical concerns about the deal, particularly the financial implications of tying up such a large amount of pensioners’ money in a single property asset.
He told the committee that one of the key issues was liquidity risk — the ability of the fund to quickly convert the investment into cash should the need arise to meet pension obligations. For a pension fund, he said, liquidity is essential because it must be able to meet its obligations to beneficiaries at all times.
The asset manager also warned that projected financial returns from the hotel were unlikely to meet the investment performance expectations required by the pension fund. At the time of the assessment, the hotel was valued between K47 billion and K48.7 billion as of March 2023, a figure Dunga indicated represented a substantial capital commitment for a single asset that would also require continuous operational and maintenance costs.
Instead of purchasing the hotel outright, Nico Asset Managers proposed a more conservative investment model designed to reduce exposure to risk. Dunga told the committee that the firm advised the Trust to seek a strategic investment partner, preferably an experienced international or local hotel management company capable of running the property efficiently.
Under that proposal, the Public Service Pension Trust Fund would have acquired a minority stake of at least 45 percent while the strategic partner would take responsibility for managing the hotel’s daily operations and leveraging industry expertise to improve performance and profitability.
However, despite the cautionary advice, the pension fund proceeded with the full acquisition of the hotel, a decision Dunga described as a “bold” move by the Trust’s leadership. The Trust justified the transaction as part of a broader strategy to diversify its investment portfolio, including expanding into real estate and hospitality assets.
The decision created a sharp divergence between the pension fund and its asset managers. Dunga disclosed that the disagreement ultimately led Nico Asset Managers to formally distance itself from the deal. On December 19, 2023, the firm wrote to the Trust withdrawing its recommendations and officially disengaging from the acquisition process.
The testimony forms part of an ongoing parliamentary investigation into the circumstances surrounding the acquisition, including questions about due diligence, valuation processes, and the protection of pensioners’ funds.
Members of the Public Accounts Committee are expected to continue questioning key stakeholders involved in the deal as they seek to determine whether the fiduciary duties owed to pension contributors were properly upheld. The acquisition of the Amaryllis Hotel has since become one of the most closely scrutinized public investment decisions in recent years, with lawmakers examining whether the transaction represented prudent financial management or an overly risky use of pensioners’ savings.
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