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Equity Bank founder follows money in industrial ventures

Businessman Peter Munga (right) with Greystone Industries Limited MD Wairimu Kieme during the interview in his Nairobi office on Tuesday. PHOTO | DIANA NGILA
Businessman Peter Munga (right) with Greystone Industries Limited MD Wairimu Kieme during the interview in his Nairobi office on Tuesday. PHOTO | DIANA NGILA 

Billionaire businessman Peter Munga has been slowly but steadily changing the composition of his investments — shedding the image of a hard-core banking and insurance mogul to become an industrialist with a mission to transform the rural economy. 

Best known as the founder of Kenya’s biggest bank by customer base, Equity, Mr Munga has over the years become a serial entrepreneur with a foothold in different sectors of the economy.

“I am an entrepreneur at heart. Entrepreneurs identify opportunities and go for them,” he said during an interview at his foundation’s office next to Muthaiga Primary School in Nairobi.

His growing list of investment has lately stretched as far as Eastern region where he bought the flagging Meru Ginneries and revamped it into an operation that now serves 300,000 cotton farmers in Meru, Embu, and Tharaka Nithi counties.

Mr Munga, who worked as a senior Ministry of Agriculture official in the 1980s, last year distributed 200 tonnes of cotton seeds to the farmers who in return offer his ginnery a steady supply of raw material.

The billionaire’s plan is to start producing sanitary towels and diapers at the factory, insisting that Kenya should not continue importing any essential consumer good that can be produced locally and cheaply.

Education sector

Unknown to many, Mr Munga is also a committed educationist who owns and runs the Pioneer Group of Schools.

The group includes the 15-year-old Pioneer High School in Maragua, Murang’a, with a student population of 1,500. St. Paul’s Thomas Academy, which is situated in the same locality, is also in his stable.

His latest act in the education sector has been Pioneer International University (PIU), a Nairobi-based institution of higher learning that began as a college in 2005 but started offering degree programmes last year after it received a letter of interim authority from the regulator.

Asked about the performance of PIU in comparison to other Kenyan universities, Mr Munga is quick to defend the institution with a population of less than 500 students.

“You have to start somewhere. The problem with people is that they expect you to start something today and it explodes into success immediately,” he says, pointing out that Equity Bank’s success did not come overnight.

“We do not believe in numbers, we provide quality education. Institutions like Strathmore may not have the numbers like other universities but their quality stands out. That is the model we are emulating.”

Beth Munga, a daughter of Mr Munga, is the deputy vice-chancellor of the institution, having taken over from her late brother who died in an accident in 2013.

Mr Munga’s son, Alex Kieme, heads Equatorial Nut Processors Limited, a company the billionaire established in 1994 to process macadamia nuts, peanuts and cashew nuts.

The company, which employs 1,000 people in its two factories in Murang’a and Maragua, processes nuts for the regional market.

It also exports nuts to the US, central Europe and Far East and has an annual turnover of approximately Sh950 million.

Macadamia oil is also extracted and sold in unprocessed form for the production of hair oil and for use in cooking.

The latest addition to Mr Munga’s growing empire is Greystone Industries Limited, a concrete poles business he started in Gatanga mid last year at a cost of Sh1 billion.

Greystone, which was commissioned last week by Deputy President William Ruto, sits on a 30-acre piece of land and has the capacity to cast 80,000 poles annually.

Wairimu Kieme, the managing director of the firm and Mr Munga’s daughter-in-law, says Kenya Power and Rural Electrification Authority are her top customers.

“Utility providers globally are moving away from treated wooden poles to concrete poles and that is something Kenya Power is doing,” said Mrs Kieme.

“We knew there was demand in this business and the factory is built in a way that allows us to scale up capacity to about 120,000 poles per year.”

Greystone employs 450 people and Mr Munga says the company is already scouting for land in Tanzania to build a factory from where he will supply the local market and export to Malawi and Zambia.

The company has plans to cast poles specifically for use in street lighting.

“One of the Jubilee government’s agenda is to light up major towns. Our goal is to first create the products and invite people to buy them,” said Mr Munga.

Kenya Power revised its policy in 2011 to allow use of concrete poles, replacing wooden posts which have a shorter lifespan than concrete poles, which though more expensive last much longer.

The electricity distributor spends between Sh2.5 billion and Sh3 billion annually on wooden poles, money it has over the past years been seeking to save by investing in concrete poles.

Throughout the 22-minute interview, Mr Munga quickly side-stepped any attempt to get to the roots of his wealth or investment or even how large his business empire is.

“Nobody will ever tell you the source of their money or where they plan to invest it. That would be like telling other people to come and do the same thing before you do it,” he said.

Mr Munga’s wealth can, however, be traced back to Equity Bank, the equivalent of the goose that has kept on laying the golden egg for him since he founded it 31 years ago.

The bank, which began as a building society in Murang’a, had about 30,000 customers, 27 employees and was operating at a loss of nearly Sh35 million in 1993 when it was technically insolvent.

It now boasts a market capitalisation of Sh177.7 billion, a net profit of Sh17.2 billion as of December when its 8,690 employees catered to the needs of the 9.7 million customers.

Equity, which has a presence in Kenya, Rwanda, Tanzania Uganda and South Sudan, has more recently set its eyes on expanding to 10 African countries.

The 70-year-old Munga has remained the chairman of the bank to date, having oversight control of his brainchild even as James Mwangi, the chief executive, manages the daily operations.

As one of the top shareholders in Equity, Mr Munga has since 2008 harvested billions of shillings from the sale of the bank’s shares, reaping the benefits of the lender’s rapid growth and the accompanying steady appreciation of its share price.

When Equity debuted at the Nairobi Securities Exchange (NSE) on August 7, 2006, Mr Munga had a 3.2 per cent stake made up of 2.9 million shares then valued at Sh261.2 million.

He has since cut this stake to 0.42 per cent or 15.41 million shares at the end of March 2015. The stake was worth Sh732.3 million at the close of trading Tuesday.

The stock has since listing been split and bonus shares issued, making it difficult to quantify its true value.

The tough-talking billionaire, however, denies any correlation between his shrinking Equity shareholding and the ongoing expansion of his empire in non-financial sectors.

“No, the two events are not related. I could have simply shifted my shareholding in these companies to another name,” he said.

“I am not moving away from the financial sector; I am simply diversifying my portfolio and not placing all my eggs in one basket.”

Mr Munga is also the fourth-largest single shareholder at integrated financial services firm Britam where he directly holds a 3.87 per stake or 75 million shares worth Sh1.65 billion at the current market price.

Filimbi Ltd, an investment vehicle he co-owns with Jane Wangui (the wife of Mr Mwangi, the Equity CEO) on a 50:50 basis, has additional shares worth Sh1.29 billion in Britam.

Equity Holdings, another investment vehicle in which Mr Munga has interests, owns Sh8.9 billion shares in the insurance firm, revealing the depths of his pockets.

Like all successful businessmen, Mr Munga remains philosophical about his wealth, insisting that his investment decisions are always made with the sole intention of empowering people at the “bottom of the pyramid.”

“Everything that I have done, and which is something many people forget, is to impact people’s lives,” he said, as he stood up to attend to the eight people waiting at the reception to see him.

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