Eight NSE tycoons lose Sh17 billion in share prices tumble

The emerging bear run at the stock market has seen 14 Kenyan billionaires lose Sh19.6 billion of their wealth on paper since the beginning of the year, with most of their stock holdings recording double-digit declines.

The top investors, including Peter Munga, Pradeep Paunrana, Baloobhai Patel and Gideon Muriuki, have taken a hit from their large holdings in insurers, banks, manufacturers and other blue-chip companies.

The stock market sell-offs have been linked to a mix of factors, including profit taking by foreign investors and the introduction of a capital gains tax at the rate of five per cent.

Some companies have also reported losses or lower-than-expected earnings, depressing their share prices and leading jittery investors to reduce their exposure.

Mr Munga, the chairman of Equity Group, had the biggest paper loss, with his portfolio at the Nairobi Securities Exchange (NSE) shrinking by Sh4 billion since January to close at Sh6.5 billion on Thursday.

This represents a 38.1 per cent drop that was driven by a fall in the share prices of Equity and Britam, in which he is a major investor.

Britam’s share price in the period fell 39.4 per cent to Sh18 while that of Equity declined 20.7 per cent to Sh40.

Equity’s share price had previously touched a high of Sh63 while Britam had rallied to peak at Sh40, signalling that their recent fall was mainly caused by profit-taking trades.

Private equity firm Helios, for instance, recently concluded the sale of its 24.5 per cent stake in the bank to a consortium of institutional investors for a total of Sh44 billion.

Mr Munga recorded a paper loss of Sh3.8 billion on his 16.99 per cent stake in Britam while his 0.4 per cent interest in Equity showed a loss of Sh161.8 million.

Equity’s CEO James Mwangi recorded the second-largest loss of Sh3.1 billion, leaving his holdings in the lender and Britam at Sh9.1 billion. Mr Mwangi holds a 4.88 per cent stake in Equity and a 5.37 per cent interest in the insurer.

Mr Paunrana, the chief executive of ARM Cement, was third with a Sh2.3 billion loss on his 18.1 per cent stake in the firm. It now has a market value of Sh5.3 billion.

ARM’s share price has lost 30.2 per cent since the start of the year to trade at Sh60, with the stock having previously touched a high of Sh95. The company made a net loss of Sh355.8 million in the half year ended June largely due to higher finance costs and provisions for forex losses, reversing the net profit of Sh847.2 million a year earlier.

Mr Paunrana’s loss is matched by that of Jimnah Mbaru, whose holdings in Britam are now valued at Sh3.5 billion, down from Sh5.9 billion.

Nairobi lawyer Jane Michuki had a loss of Sh2.1 billion on her Britam shares, making hers the fourth-biggest portfolio contraction among the billionaire investors. Her 9.2 per cent stake in the insurer is now valued at Sh3.2 billion compared to Sh5.3 billion at the beginning of the year.

Chris Kirubi, the single-largest shareholder in the investment firm Centum with a 26 per cent stake, recorded the fifth biggest paper loss of Sh1.6 billion. His stake in the company is now valued at Sh9 billion, down from Sh10.6 billion in January.

Centum’s stock has fallen 15.4 per cent since the year started to trade at Sh52, climbing down from a rally that was sparked by Mr Kirubi’s share purchases and announcement of major projects, including power generation.

Mr Kirubi has raised his interest in the company from 24.99 per cent in September 2013 with a goal of taking it to 29.9 per cent in the near term, a move that contributed to the stock hitting a high of Sh84.5 last year.

Britam chief executive Benson Wairegi was sixth with a Sh1.2 billion decline in his significant stakes in the insurance firm and Equity Group. This left his paper wealth at Sh2.1 billion compared to Sh3.4 billion in January.

Mr Patel, who holds one of the most diversified portfolios at the NSE, followed with a Sh652.2 million loss to stand at Sh4.2 billion.

The investor took a hit from his interests in Carbacid, Pan Africa Holdings, Barclays Kenya and DTB Bank, whose shares dropped by between 14.7 per cent and 26.5 per cent in the same period.

Mr Patel’s shares in Limuru Tea and Bamburi, however, gained 111 per cent and 11.5 per cent respectively, mitigating the portfolio decline in the other firms.

Mr Mwangi’s wife Jane Njuguna followed with a Sh630.4 million paper loss on her Equity shares, which are now valued at Sh2.4 billion, down from Sh3 billion in January.

Other billionaire investors who also recorded paper losses running into hundreds of millions of shillings are WPP ScanGroup’s Bharat Thakrar and Mr Muriuki, the Co-op Bank CEO.

Mr Thakrar’s 13.6 per cent stake in WPP Scangroup declined by Sh401 million to Sh1.9 billion. Meanwhile, Mr Muriuki saw his combined interests in Co-op Bank and CIC Insurance fall by Sh289.8 million to Sh2.8 billion.

Mr John Kibunga Kimani was the only billionaire investor to record an overall gain on his NSE portfolio, helped by the share rally in Kakuzi that mitigated the losses in his holdings at Total Kenya, Nation Media Group and East African Breweries.

Mr Kimani gained Sh504 million, sending the value of his portfolio up 19.1 per cent to Sh3.1 billion. His 26 per cent interest in Kakuzi benefited from the company’s share price jump of 90.5 per cent since January to trade at Sh343.

While the big investors have recorded major paper losses, these are unlikely to be realised since they have the financial strength to ride out bear runs.

This has given them the advantage of waiting for a favourable market to sell part of their stakes while receiving multimillion-shilling dividends annually.

Small investors have traditionally been the victims of bear markets, with some selling at a loss out of panic or when pressed for cash to fund basic consumption.