How James Gachui built a multi-billion shilling empire

Nothing speaks more of the fire of entrepreneurship he carried in his belly than the size of the business empire he built in a span of 15 years.

James Gachui, who passed on last Thursday, was ambition, shrewdness and guile all wrapped up in one – for play in Kenya’s often treacherous business scene.

His close associates say the centrepiece of his drive was the old school belief that a good idea must always give birth to a better idea.

Some say he had in his own right reworked the dictum to suit his entrepreneurship mien, strongly believing instead that good money had to make better money.

Mr Gachui’s large footprint in the world of business was such that it has been hard to get a proper estimate of his worth at the time of passing on.

By the close of last year, the burly businessman had a significant presence in key sectors of the economy – including the consumer market, finance, ICT, energy, and manufacturing.

That list includes East African Cables Limited, the Wananchi Group, Genghis Capital, Enablis, Chase Bank and Galana Oils – the petroleum marketing outfit he founded immediately he parted ways with his last employer, Total Kenya. Going by the most modest estimates, Mr Gachui’s business empire is estimated to be worth more than Sh5 billion.

He was among the group of 29 that in 1997 dreamed big and started an investment club TransCentury (TCL), with an initial demand that the membership forks out Sh1 million each as seed capital.

In the list of membership were some of Kenya’s top most business elite – commonly known as the Muthaiga group – famous for their elaborate business and political connections that ride deep into centre of power – the presidency.

TransCentury’s membership included Zeph Mbugua, Peter Kanyago, Robin Kimotho, Joseph Kamau, Kariithi Njogu, Jimna Mbaru, Joseph Karago, Michael Waweru, the KRA Commissioner General and Eddy Njoroge, the CEO of electricity producer KenGen.

The initial seed money, which the late Gachui once told the Business Daily amounted to Sh24 million, was given to Mr Mbaru, the investment banker and long-serving chairman of the Nairobi Stock Exchange, to invest in the equity market.

TransCentury’s first big investment was the $300,000 (Sh21 million) it ploughed into Castle Breweries, the South African Breweries-backed outfit that set up shop in Kenya at the turn of the Millennium, sparking a bruising battle for the beer market with East African Breweries limited.

That battle came to a close in 2002 when the two beer giants, EABL and SABMiller, signed a truce and agreed on a share swap that saw Castle exit Kenya in exchange for a similar by EABL in neighbouring Tanzania. TransCentury promptly got its money back.

Whether by sheer coincidence or a deliberately crafted plan, TCL quickly transformed into a major player in Kenya’s corporate scene beginning early 2003, a few months into Kibaki’s presidency.

Within months, it had acquired the image of Kenya’s foremost corporate raider with a knack for pulling off stealthily executed multi-million shilling deals and riding them within months to harvest handsome returns.

TransCentury’s first act on this front was the Sh45 million purchase in March 2003 of a 70 per cent stake in East African Cables Limited.

TCL did not stop playing the stock market game, but used its cash to hunt for high potential deals.

That saw the investment club acquire a four per cent stake in utility firm Kenya Power and Lighting Company (KPLC) for Sh340 million in March 2006.

It was a hit made at the right time. The NSE’s equity market was then enjoying a robust bull run that saw investors more than double their wealth in a span of six months.

A few months later, amidst controversy involving government ownership of KPLC, TCL sold two per cent of its holdings to enable the government retain majority shares in the power utility firm.

By this time, TCL’s investment had doubled in value to Sh680 million, enabling the group to harvest a Sh340 million profit in October 2006.

TransCentury later sold out the remaining stake in the firm for an unknown amount of money and used the proceeds to spread its footprints in other sectors of the economy.

The group, which converted into a private equity firm in late 2008, said in a private placement note to investors in 2007 that it had a presence in a number of Kenyan companies including East African Cables Limited, Avery East Africa, Rift Valley Railways, Development Bank of Kenya, Equity Bank, Kenya Airways and Karen property that was then valued at Sh46 million.

Bought stake

It was only logical that as TransCentury spread its footprint across Kenya and Africa’s corporate scene, Mr Gachui, who was its chair and the lead shareholder with an 8.4 per cent stake, multiplied his wealth at the same pace.

East African Cables alone is now worth Sh3.2 billion by market capitalisation – pricing TCL’s stake at about Sh2.3 billion.

And assuming that TCL has kept 1.06 per cent shareholding in Equity Bank, that stake alone is now worth Sh991 million going by the current market valuation.

But Mr Gachui is said to have had additional presence in equity through his investments in other vehicles such as UK-based Helios Capital.

Since 2007, TransCentury has also spread its presence across the borders into South Africa and Tanzania where it acquired Kewberg Cables for Sh528 million and Tanelec, the cables maker it bought a 70 per cent stake in for Sh298 million, respectively.

The investment club, which converted TCL into a private equity fund in 2008, also had an eight per cent stake in Zambia Metal Fabricators then estimated to be worth Sh163 million and has significant presence in a number of foreign-based private equity and venture capital funds including Aureos China, Aureos South Asia, Business Partners and Helios LLP – the UK-based fund that bought a 24.99 per cent stake in Equity Bank for Sh12 billion in 2008.

The fair value of TransCentury’s total investments, including stakes in quoted companies, is now estimated to be about Sh8.5 billion.

Originally, Mr Gachui was the top shareholder with a 8.4 per cent stake.

Though he was chairman and lead troubleshooter for the investment group, TransCentury was not the epicenter of Mr Gachui’s commercial empire – Jimana Capital, a company he founded with Mr Mbaru was.

Judging by the level of investment, the amount of time he spent shuttling across the globe and personal interest in the subject, Mr Gachui’s friends say Information and Communication Technology (ICT) was the love of his life.

Through Jimana, Mr Gachui not only followed TransCentury in its investment and corporate raider activities but sunk his teeth deep into the ICT world.
Wananchi Group is now estimated to be worth more than Sh10 billion placing Mr Gachui’s stake at not less than Sh1 billion.

He also held major stakes in Seven Seas Technologies – an IT services firm he At Seven Seas, an IT services firm, he helped to establish with private equity funding of Sh390 million from Aureos capital, a Global Private equity Fund.

The company is now estimated to be worth Sh1 billion.

Add on to this his presence in Chase Bank, a commercial bank whose total capital stood at Sh1.2 billion at end of last year, Genghis Capital estimated to be worth Sh280 million, Enablis, an entrepreneurship development financier (about Sh200 million), and the real worth of the man begins to add up offering a glimpse into the multi-billion empire he left behind when he succumbed to a brain tumour last Thursday.