Billionaire investor Baloobhai’s Carbacid stake hits Sh1bn

Billionaire investor Baloobhai Patel. PHOTO | FILE
Billionaire investor Baloobhai Patel. PHOTO | FILE 

Billionaire investor Baloobhai Patel has acquired an extra four per cent stake in Carbacid for Sh150 million, cementing his position as the top shareholder of the company.

Mr Patel bought 11.4 million shares in the year to July 2016, raising his interest in the NSE-listed firm from 26 per cent to 30 per cent, according to Carbacid’s latest annual report.

The purchases came amid a steady decline in the firm’s share price during the year from highs of Sh17.7 to lows of Sh14.7, reflecting the bear run that has gripped Nairobi Securities Exchange (NSE) stocks.

The investment is seen as a sign of the billionaire investor’s confidence in the company’s future prospects.

Mr Patel is typically long-term investor who holds stocks for many years after purchase.

His Carbacid stake is now worth Sh1 billion based on the firm’s share price of Sh13.05 in Tuesday’s trading, making it the most valuable among his equities portfolio.

His interests in Bamburi Cement and Sanlam Kenya Plc have dropped below the Sh1 billion mark, eroded by the bear market.

The investor’s total stocks portfolio stands at nearly Sh3 billion, with additional stakes in Barclays Bank of Kenya and Diamond Trust Bank, among others.

His purchase of more Carbacid shares came amid significant sell-offs by the company’s chairman James Wanjigi in what appears to be profit-taking trades.

Mr Wanjigi sold 6.1 million shares worth over Sh85 million in the same period, cutting his stake to two per cent from five per cent and sliding from fourth to fifth in the list of the company’s top 10 shareholders.

Carbacid, which makes investments besides mining carbon dioxide, says it is facing new competition in the gas business from alcohol manufacturers.

“Our markets have remained challenging during the financial year ended July 31, 2016, impacted to an extent by new competition from alcohol-based manufacturers of carbon dioxide,” the company said in the report.

“Carbacid continues to be proactive in serving its customers’ requirements … The strategy as always, is to ensure that Carbacid reliably delivers the highest quality products free of any alcohol base, a particular requirement of a large segment of the market for ethical reasons.”

Alcohol manufacturers can harness carbon dioxide as a by-product of their production process.

Liquor makers are the latest to enter Carbacid’s turf after State-owned Geothermal Development Company (GDC) announced it was also considering extracting the gas at the Menengai geothermal field.

Carbon dioxide is used to preserve soft drinks, wine and beer. In solid form, it is used as dry ice in refrigeration of foodstuffs like ice cream and meat products.

Food and beverage firms including East African Breweries, Coca-Cola, and flavoured juice manufacturers use the gas as a preservative or to enhance their products.

Demand for the gas is expected to rise on the back of growth in the soft drinks industry. Bidco Oil Refineries, for instance, is planning to venture into the soft drinks market with a Sh1.7 billion beverage plant off the Thika-Garissa highway.

Carbacid recorded a 4.6 per cent net profit drop to Sh375.5 million in the year ended July on reduced market value of its equity investments and absence of Sh32.5 million in property gains booked in the prior year.

The firm also took a hit from the bear run at the NSE, with its unrealised losses on listed shares at Sh31.1 million.