Athi River CEO inherits shares worth Sh3.5bn
The Paunrana family has distributed its shares in Athi River Mining (ARM) Company among its members making managing director Prandeep the single largest shareholder in the cement firm.
Regulatory filing indicate the family’s investment vehicle—Amanat Investment—has been split and the managing director Pradeep Paunrana offered 17.9 million shares or a 18 per cent stake worth Sh3.54 billion.
This has reduced the ownership of Amanat Investment to 28 per cent in a split that is seen as a reward to the managing director who has diversified the company and grown its annual sales from Sh518 million in 1997 to Sh8.1 billion last year.
The move is part of the distribution of the wealth of ARM’s founder H. J. Paurana among his descendants after he passed on in 2009.
“I was allocated the shares as part of the estate planning after my father passed on in 2009,” Mr Paunrana told the Business Daily in a telephone interview on Thursday.
Estate planning refers to the management of an incapacitated or deceased individual’s wealth, including distribution of assets to heirs and settlement of taxes.
“Collectively, the family’s interest in the company has not changed,” said 52 year-old Mr Paunrana, adding that his siblings now control Amanat.
The father, who spent decades in the board of ARM, helped establish the cement firm in 1974 with financing from friends and relatives whom he offered stakes and remained with a 25 per cent ownership.
Most of the founders have exited the firm and the Paunrana family has grown their ownership to 45 per cent in the company that National Social Security Fund has 870,000 shares.
But it’s during Mr Pradeep’s tenure that the company has grown faster, diversified its products including cement production, and widened its geographical and shepherded its listing at the Nairobi Securities Exchange in 1997.
He joined the company as an accountant in 1984 after his MBA from New York University Stern School of Business and was promoted as the managing director in 1993.
The allocation of the 18 per cent stake to Mr Paunrana has seen him join the league of billionaire CEOs that include Equity Bank’s James Mwangi, whose stake in the bank stands at Sh3.9 billion and Bharat Thakrar whose shares in Scangroup are worth Sh2.9 billion.
Shares in ARM gained 8.8 per cent to Sh198 at the close of trading yesterday.
The share has risen 29.4 per cent in the past six months, in line with a 20.2 per cent gain in the benchmark NSE-20 Share Index over the same period.
Its rival Bamburi has gained 37.6 per cent in the six months to Sh179 while Portland Cement has gained 4.4 per cent to Sh58.50 over the same period. ARM started operations with the manufacture of agricultural lime and minerals used as raw materials in paint, rubber, and glass production.
Presently, cement and lime accounts for about 70 per cent of its revenues while Kenya generates 96.2 per cent. It has, however, stepped up its diversification plan to generate more revenues from the regional market.
The cement maker has operations in Tanzania, South Africa and Rwanda, where it last year acquired a 35 per cent stake in Kigali Cement Company.
Its net profit rose to Sh1.1 billion last year from Sh1 billion in 2010.
This saw the cement maker increase its dividend payment from Sh1.75 a share to Sh2—which earned Mr Paunrana Sh35.8 million from his 17.9 million shares.