Mbaru receives Sh500m on Britam stake ahead of poll
Mr Mbaru said he opted for a bank loan because the shares are now undervalued at the bourse. Photo/File
What you need to know:
Mr Mbaru says he sold about 20 million shares worth Sh116 million and used the remaining 60.7 million as security for a bank loan when the share averaged Sh5.80 — valuing the shares at about Sh478 million.
The investment banker is preparing for the race of governor of Nairobi that is billed one on fiercest among county elective seats.
Businessman Jimnah Mbaru has received nearly half a billion shillings from his stake in British American Investment Company in the half year ended December through share sale and bank pledges.
Filings with the regulator show that Mr Mbaru’s direct stake dropped to 10.2 per cent in November or by 80.7 million shares from 15 per cent in September 2011.
The investment banker, who is the majority shareholder in Dyer & Blair Investment Bank, says he sold about 20 million shares worth Sh116 million and used the remaining 60.7 million as security for a bank loan when the share averaged Sh5.80 — valuing the shares at about Sh478 million.
“I recently sold 20 million shares and pledged the other shares to a bank loan,” said Mr Mbaru in a phone interview with the Business Daily, adding that he opted for a bank loan because the shares are now undervalued at the Nairobi Securities Exchange (NSE).
He becomes the first top shareholder of British American Investment Company that included Equity Bank CEO James Mwangi, the firm’s chief executive Benson Wairegi and businessman Peter Munga to reduce stake since its listing at the Nairobi bourse in July 2011.
Mr Mbaru is preparing for the race of governor of Nairobi that is billed one on fiercest among county elective seats.
“It is likely Mr Mbaru was looking for campaign cash since there has been little room for profit taking on Britam that is trading below its IPO price,” said a stockbroker close to Mr Mbaru and who did not want to be seen discussing his peer’s finances.
The share has shed 14.2 per cent over the past year to the current price of Sh6.05—which is below the psychological IPO price of Sh9.
The Capital Markets Authority (CMA) had barred British American’s top seven shareholders from reducing their combined stake in the company to below 51 per cent before August 2013 to offer comfort to new investors who acquired a 30 per cent stake during the listing.
Exhausted limit
Other top shareholders of the financial services firm include Jane Michuki, a managing partner at Kimani & Michuki Advocates, Dawood Rawat, a foreign national and Jane Wangui, the wife of Equity Bank CEO.
“The existing shareholders have undertaken under the terms of lock- in agreements executed with the company not to reduce their combined shareholding below 51 per cent of the company’s paid-up capital in the two years following the date of listing of the Shares on the NSE,” said British American in the prospectus that guided the 2011 IPO.
Under the lock-in, Mr Mbaru was allowed to sell a maximum of 80.7 million shares of the 300 million shares he owed after the IPO in the first two years — meaning that the investment banker has exhausted his share sale limit.
Mr Mbaru’s 219.3 million shares in British America are currently worth Sh1.32 billion.
Mr Rawat, a Mauritian national, owns 385.5 million shares valued at Sh2.33 billion. The CMA had allowed him to sell up to 103 million shares within the first two years of the IPO.
Mr Munga, the businessman who together with James Mwangi made his first billion at Equity Bank, is the second largest shareholder with 345.1 million shares held directly and through separate entities that own shares in Britam.
His total portfolio in the investment firm is worth Sh2.08 billion and had a chance to sell up to 80.5 million shares in the two years.
Top investors
Mr Mwangi and his wife control 120 million shares worth Sh726 million at Britak and have the right to sell up to 60.1 million shares.
Mr Mbaru becomes the latest anchor shareholder of hitherto private companies to sell shares through the Nairobi Securities Exchange (NSE), earning hundreds of millions of shillings.
Top investors in Equity Bank have pocketed millions of shillings after the expiry of the golden handcuffs’ period in July 2008 with its CEO cutting his direct stake in Equity Bank from 5.37 per cent in 2008 to 3.45 per cent, through several share sales that have earned him about Sh1.6 billion over the past three years.
In Scangroup, key shareholders including the media services firm’s CEO Bharat Thakrar, his creative director Andrew White and Koome Mwambia, former chief executive of Ogilvy East Africa all cut their shareholding in the past one year. Mr Thakrar earned Sh150 million last year from his first share sale while Mr White has earned nearly half a billion shilling from stock sales since December 2011.
