Big ticket investors defy tough year to grow wealth

For millions of Kenyans who have had to endure the shocks of a nerve-racking election, the steep increase in prices of consumer goods and a deadly wave of violence in the past 12 months, 2013 goes down as one of the most difficult years.  

That out-turn is, however, far removed from the reality of a small group of billionaire entrepreneurs for whom 2013 has been most lucrative – funnelling into their pockets billions of shillings from mergers and acquisitions, real estate and the stock market.

Takeover deals made the entrepreneurs the most money, allowing them to harvest billions of shillings from the sale of stakes in companies that were acquired by foreign investors looking for a foothold in Kenya or widening their presence in East Africa’s largest economy.  

Deals that earned local entrepreneurs billions of shillings with the sale of all or part of their interests include Fina Bank, Interconsumer Products, Kenya Data Networks (KDN) and Swift Global.

Dhanu Chandaria, the entrepreneur, who founded Fina Bank, topped the list of big harvesters having pocketed an estimated Sh8.6 billion from the sale of his 70 per cent stake in the bank to Guaranty Trust Bank of Nigeria – the year’s single-largest deal.

Paul Kinuthia, who founded the consumer goods manufacturing firm, Interconsumer also harvested big when the French firm L’Oreal came calling for the personal care segment of the business in a deal that was priced at slightly more than Sh1 billion.

Mr Kinuthia spinned off the health and beauty segment of the business in April, choosing to retain the sanitary care business that he has since managed to turn into one of Kenya’s fastest-growing medium-sized companies.

Businessmen Naushad Merali reaped big twice after international punters came calling for two of his companies KDN and Swift Global, making him one of the biggest beneficiaries of 2013’s windfall.

Mr Merali has earned hundreds of millions from the sale of his 49 per cent stake in Internet service provider Swift Global and another 19.2 per cent interest he held in Internet infrastructure firm KDN.

Both stakes were sold to Mauritius-based Liquid Telecom, which did not reveal the value of the sales estimated to run into hundreds of millions.

At motor dealer CMC, 2013 offered big relief for the thousands of investors stuck with ownership of a company that for nearly two years was dogged by internal boardroom wrangles, causing its suspension from trading at the Nairobi Securities Exchange (NSE).

Warring shareholders agreed on a ceasefire that paved the way for sale of the company to Dubai-based Al Futtaim Group in a deal that is expected to leave top shareholders billions of shillings richer.

Businessman Peter Muthoka, who has a 24.7 per cent stake in the company, tops the list of CMC big reapers. Mr Muthoka, who owns the stake through his logistics firm Andy Forwarders, is expected to pocket Sh1.8 billion from the Sh7.8 billion sale to be concluded in the first half of 2014.

His business associates Joel Kibe and Paul Ndung’u are expecting a Sh1.7 billion windfall for their combined 23 per cent stake in the auto dealer while businessman Jeremiah Kiereini will earn Sh910.4 million for his 12.5 per cent stake.

Billionaire investors Peter Munga and Jimnah Mbaru also earned millions of shillings from selling part of their ownership of NSE-listed firms.

Mr Munga pocketed the initial tranche of 2013’s harvest when he sold Sh260 million worth of shares he owned in an investment company in the first half of the year while. Mr Mbaru earned Sh107 million from the sale of 3.6 million shares in the investment firm Transcentury.

Bank loan

Early in the year, the investment banker had received nearly Sh500 million from the sale of 20 million shares in the financial services firm Britam and used 60.7 million of the firm’s stocks to secure a bank loan.

Mr Mbaru and Munga also racked up major capital gains from a rally in their stock market portfolios alongside other billionaire investors such as Chris Kirubi, Baloobhai Patel, Benson Wairegi, James Mwangi, and Jane Michuki.

This group of investors reaped sumptuously from a price rally at the NSE sparked by major corporate actions at Centum, Britam, Carbacid and Pan Africa Insurance where they own millions of shares.

Share prices of the four firms rose by between 115 per cent and 167 per cent in the past 11 months, inflating the top owners’ portfolios by more than Sh20 billion. This performance has seen them beat, by large margins, the benchmark NSE-20 Share Index that has only gained about 18 per cent in the same period.

Centum’s stock rose by the highest margin over the year at 167.4 per cent to trade at Sh32.5, followed by Britam which rose 144.9 per cent to Sh14.4.

Share split

Carbacid’s shares jumped 116.3 per cent to Sh49.7 – accounting for a share split of one to five – while Pan Africa appreciated 115 per cent to Sh86.

The capital gains increased the value of Mr Munga’s 15.3 per cent stake in Britam to Sh4.7 billion while Mr Mbaru’s 10.2 per cent interest in the firm jumped to Sh3.1 billion.

Fellow investors in Britam Jane Michuki, Benson Wairegi, and James Mwangi saw their 8.3 per cent, 4.6 per cent, and 1.3 per cent stakes rise to Sh2.5 billion, Sh1.4 billion, and Sh1 billion respectively.

Centum’s price gains saw Mr Kirubi’s 25 per cent stake in the firm jump to Sh5.3 billion while Mr Patel’s total NSE portfolio surged above Sh3 billion on account of Carbacid and Pan Africa share price rally.