Heritage

Merali: Tough deal-maker who rarely misses target

merali

Naushad Merali needs no introduction in the business world. ILLUSTRATION | STANSLAUS MANTHI |

Naushad Merali needs no introduction in the business world. A man who knows when to snap up investments – and when to quit – he was this week back in the news over the sale of his Equatorial Commercial Bank (ECB).

Mr Merali has almost sealed a deal to sell a majority stake of ECB to Mwalimu National Co-operative, the largest sacco in the country populated by workers in the education sector.

But the Commissioner for Co-operative Development ordered a probe into the deal and appointed a team of three to look into concerns on the valuation, profitability and corporate governance at ECB in 15 days.

An old boy of Nairobi’s Highway Secondary School, Mr Merali often shies away from the limelight and is rather proud of the Zarina and Naushad Merali Foundation, a charity he runs together with wife Zarina.

Away from making super profits, Mr Merali has been a philanthropist and his foundation, for instance, donated Sh100 million to Kenyatta National Hospital for the construction of a 24-bed day care facility valued at Sh278 million.

The couple also spent Sh11 million on Jaffery’s Club, where he laid a professional walking track on a former dumpsite, transforming it to a sporting facility for cricket players, and ordinary Kenyans, complete with a mosque.

Mr Merali comes from a trading background.

His great grandfather was a cotton and spice trader who arrived at the east coast of Africa with other Indian pioneers in 1880s and settled in the coastal town of Lamu.

He is, however, a man of three nations. He grew up in Moshi and studied in both Kenya and the UK where he worked as a chartered accountant.

One of the problems cited in the current Mwalimu Sacco deal is that ECB is not profitable. Unknown to many, Mr Merali made his wealth by first purchasing unprofitable companies and turning them around in his formative days as an investor.

That is how he asked Frank Ryce, the owner of Ryce Motors to sell it to him in 1975 when he was still a teenager and had to ask a bank to lend him Sh600,000.

His next acquisition was in 1983 when he founded Equatorial Bank, then operating as a finance house. It is this bank that he wants to part with after 30 years.

Mr Merali is one of Kenya’s super-rich, with his wealth estimated at Sh20 billion. His biggest break came in the telecoms sector when he purchased Vivendi shares as the race to control Africa’s mobile phone market became a tussle between South Africa’s MTN and Celtel.

Mr Merali was not eager to deal with the South Africans as he was quoted saying: “The chemistry was all wrong.” This is perhaps one of the greatest investment battles that he fought, by reaching out to his billionaire friend Mohammed Ibrahim, the chairman of Celtel.

He exercised his pre-emptive rights and brought Celtel on board.

With Dr Ibrahim’s help, he put Sh18.4 billion on the table. An hour later, he sold some shares and made a profit of Sh1.6 billion.

His tenure saw him shrink his shares to five per cent (Bharti Airtel Kenya) in 2013. He also added $150 million (Sh13.7 billion) to his wealth and later retired as chairman in 2013. The rest is history.

A man who also bought the Firestone US stake in Firestone East Africa in 1985 with bank loans, Mr Merali is perhaps more known for rebranding the well-known tyre brand into Yana Tyres and making a fortune when the company was floated on the Nairobi Stock (now Securities) Exchange.

It was from here that he started building a strong empire in banking, agriculture and infrastructure sectors. Today, his name is mentioned in the history of First American Bank of Kenya, Sasini Tea and Coffee, H Young & Company, and Eveready Batteries. He was also the man behind East African Cables before he sold it in 2004.

It is his latest attempt to sell ECB that has brought him back into news.

In 2008, he had hit headlines when he relinquished 51 per cent of his 96 per cent stake at Kenya Data Networks (KDN) to South African Altech for Sh5.2 billion. In 2009, Altech raised its stake to 60 per cent. In 2013, he ceded ownership at KDN further to 20 per cent, leaving Liquid Telecom with 80 per cent rights. At the time, Altech had sold its interest to Liquid Telecom.

It is such moves that have made him an investor to watch. But he has not had fun all through. Eveready is perhaps one of the few battles he has fought and lost.

Sameer Group, named after his son, is the business by the billionaire which always rings a bell with Kenyans whenever the tycoon’s name is mentioned.

Forbes Africa magazine ranks Mr Merali among 100 African billionaires with $440 million (Sh40 billion) fortune. Perhaps they are right. But he remains one of the country’s epic risk-takers.

He could perhaps teach Mwalimu Sacco how to invest.