Bitbricks: Creating Ugandan bred real estate investment opportunities

The homes are condominium flats so each home will have its own title.  PHOTOs/Joan Salmon.

What you need to know:

Livingstone Mukasa is the founder of Britbricks, a private equity company. The company has invested in construction building homes for members in a bid to solve the housing deficit challenge…

Livingstone Mukasa, the co-founder for Four One Financial Services Limited, is the glass half-full kind of person.  As a financial and business consulted he always looks for ways to get people to focus on ways they can improve their finances instead of dwelling on their challenges.

One of those ways he conceived was starting a big project of building homes for sale.

 “I designed a Shs3bn project to build 24 condominium homes for sale in two years,” says Mukasa. Working on this project would help Mukasa focus his energy on something tangible while also inspiring others to look beyond their current unpredictable circumstances caused by the coronavirus pandemic.

Mukasa’s financial management prowess was recognised for establishing the Mazima Retirement Plan, Uganda’s first Micro Pension Fund in 2016. The scheme serves more than 3,000 people to date. Its main goal is to help people prepare for retirement especially those in the informal economy who are still in their 30s and 40s.

Between 2016 and 2019, Mukasa and his team were consumed with coming up with innovative ways that would help members acquire homes which are an essential element of a successful retirement. However, they struggled to find a workable solution due to limited capital.

 The way out was the trust built through Mazima Retirement Plan which had systems that could track and process payments at a large scale. One such systems is Mayicard Technology Platform.

When Covid-19 hit, the housing challenge became urgent for Mukasa, and a solution presented itself through a private equity fund that would build homes for sale or for rent. That fund came to be known as Bitbricks.

He shared the idea on his Facebook page and it attracted several people who were willing to invest or buy homes. Realising that there was possible traction, Mukasa secured land in Seguku Parish, Katale Village, Wakiso District for the project.

A few weeks later, someone reached out to Mukasa, with an investment of Shs16m. Another followed with Shs6m.   Bitbricks needed to raise Shs3b for the project and that became the company valuation from the beginning.

This capital was broken up in Shs1m shares of Shs3,000 each. Each joining member would choose to buy as many shares as they could afford.  As a private company, Bitbricks should have 100 shareholders.  As of now, there are 81 shareholders. While the Shs3bn was not raised, Shs100m was in the bag by the end of January 2021. A decision was made, nonetheless, to start constructing the homes as members raised more money. 

Meeting the Shs3bn target

The 24 homes, upon sale will make money for the shareholders and the offer is a preferential rate of 20 percent per year for two years.

  “We also resolved that we were going to sell our homes off-plan to avoid a situation where homes are built but the developers struggle to find buyers at the end of the process. Given my background in marketing, I knew I could get people to buy Bitbricks homes,” he says.

With the idea of ongoing fund pooling, they decided to break the homes into two blocks, A and B each having 12 homes.

“There was excitement in the community when we broke ground in February after getting building plan approvals and doing Geotech surveys of the location. Since then we have constantly communicated to our members about the progress. Besides, people coming to the site to see the progress the project gave other entrepreneurs to replicate the arrangement for their own projects,” Mukasa says.

Artistic impresssion of the project after completion. 

Earning trust

While Mukasa has already earned people’s trust, so can you by proving you can put their best interests before yours. 

“To be trusted, you need to approach service providers with the sole goal of ensuring your investors make money. That is the responsibility I have to our partners. This project proves that Ugandans can mobilise for a big project and that not everyone is a crook. I would therefore, encourage people who have network of trusted friends to think about real estate using a collective funding approach. This can help solve the acute housing deficit in our country,” he says.

Mukasa adds the systems at hand matters. In the case of Bitbricks, Mayicard Technology Platform has been very instrumental in onboarding, processing and tracking contributions.

“It also helps when awarding interest and the partner can also see their statement at their convenience. Structures are also important and that is why we have a Board of Directors and a liaison office in Nakulabye where people can come to meet for business. We also operate an open policy at our construction site. This is important because it has pushed us to deliver quality work, and use standard building materials and processes” he says.

Security of Investment

The market has a lot of guaranteed investments which Mukasa thinks are making people misunderstand capitalism. In this case, Bitbricks are not guaranteeing a return but a promise to execute to the best of their ability.

“If I put a guarantee, I am putting my personal estate at stake yet I might not have that amount of money. Therefore, if you are buying shares, there is no guarantee. However, if you are giving us a loan, then we can guarantee payment at a certain date,” he says.

The homes are condominium flats so each home will have its own title. Mukasa says many of their clients and investors are Ugandans in diaspora.

“Others already own homes but are planning to rent these homes out to get another stream of income. The probable rent is expected to start at Shs1.2m monthly because they are beautiful homes with amazing scenery,” he says.

Mukasa is always working to give people hope and he believes that with this project, it is a step in the right direction.

“I am looking forward for other people to do something like this so we can diversify genuine investment opportunities for our people in this economy,” he says.

How does private equity work?

According to UK based audit, tax and consulting firm RSM, private equity firms raise money from institutional investors ( pension funds, insurance companies, sovereign wealth funds and family offices) for the purpose of investing in private businesses, growing them and selling them years later, generating better returns for investors than they can reliably get from public market investments. 

Private equity firms do not run the businesses they invest in. They back an experienced management team to carry out an ambitious but realistic growth plan usually over a period of three to five years. The key to success is making sure that the management team is able to focus fully on executing the growth plan.

This means that the private equity investment must provide an exit for shareholders wishing to leave the business, a partial exit for those wishing to ‘de-risk’ or ‘step back’ and equity for new or existing team members that need incentivising.

A private equity deal achieves this at its outset and the result is an aligned, executive management team, heavily motivated to take on an ambitious growth plan.

 Following investment, private equity firms take an active but non-executive role in the business, contributing particularly where their skills as financers can help, such as finding and funding acquisitions, building the company’s finance and governance functions and assisting with the recruitment of senior hires.

Private equity funding is flexible, and every deal is tailored and negotiated to fit the situation. Each shareholder can have a different deal and full or partial exits can be accommodated in differing proportions for each shareholder, usually depending on the executive’s day-to-day role in the business and their role in its ongoing success proach their business thereafter in the knowledge they are no longer risking everything when they make a bold business decision. 

Private equity funding is flexible, and every deal is tailored and negotiated to fit the situation. Each shareholder can have a different deal and full or partial exits can be accommodated in differing proportions for each shareholder, usually depending on the executive’s day-to-day role in the business and their role in its ongoing success.

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