Muguku family further reduces shareholding in bank

The family of the late Nelson Muguku has further loosened its grip on Equity Bank after it transferred shares worth Sh220 million within the three months to June.

Regulatory filings indicate that the family cut their shareholding from 4.3 per cent in October last year to 2.03 per cent in December, and 1.76 per cent in June after selling 10 million shares.

The Muguku stake is now being held by Leah Muguku and it is not clear whether the family sold the 81 million shares since October or distributed the stocks among beneficiaries of the Equity stake that at one time was worth more than Sh5 billion.

The direct stake held by the Mugukus is now worth Sh1.4 billion — a drop that has seen the family cede the position of Equity’s largest individual shareholder to the bank’s CEO James Mwangi and Andrew Kimani.

Individual top shareholders of Equity Bank have since 2008 harvested billions of shillings from the sale of their shares after the end of a two-year-lock-in period for anchor shareholders. The anchor shareholders were barred from selling their shares as a condition to listing at the Nairobi Securities Exchange (NSE) in 2006.

“The sale of the shares by top shareholders is a case of profit-taking as the business moves to maturity,” said Johnson Nderi, an analyst at Suntra Investment Bank, adding that reduction of the Muguku stake could be a case of estate planning.

Mr Muguku, who passed on in October 2010 at the age of 78 years, built a multi-billion shilling business empire from humble beginnings.

The Muguku family cut back its stock by 12.9 million shares within the nine months to September 2011, earning about Sh250 million.

In 2010, they sold shares worth Sh1.2 billion and Equity said the sale was intended for purchase of Standard Chartered Bank former headquarters along Moi Avenue, which has been placed on auction after the bank found a new home in Westlands.

The Business Daily could not confirm whether the deal went through.

The value of the family’s stake held by Ms Muguku has risen from Sh522 million in 2006 to the current Sh1.4 billion, despite selling millions of shares.

Mr Mwangi has earned about Sh1.6 billion over the past three years from share disposals that he said were dictated by regulations barring an executive director of a bank from holding more than five per cent of the institution’s capital.

His direct stake has dropped to 3.45 per cent from 5.49 per cent, but he has indirect interests through British American Investments and the bank’s Employee Share Ownership Plan amounting to 1.43 per cent.

Mr Mwangi’s direct stake is worth Sh2.84 billion.

Since the bank’s debut at the NSE on August 7, 2006, its stock has appreciated the most over the five-year period, opening the way for investors to skim their holdings at decent capital gains.

The share has appreciated by more than 900 per cent since listing when share splits and bonus stocks are taken into account in what has made its owners, including employees, directors and founder’s, millionaires.