Capital Markets

Mwangi family’s fortune in Equity tops Sh12bn

Equity Bank chief executive officer James Mwangi. PHOTO | FILE
Equity Bank chief executive officer James Mwangi. PHOTO | FILE 

Equity Bank chief executive officer James Mwangi’s paper wealth has surged to a new high, helped by a steady climb in the bank’s stock at the Nairobi Securities Exchange.

Mr Mwangi’s 6.5 per cent stake (co-owned with his wife Jane) in the bank is now worth Sh12.15 billion, making it one of the largest family fortunes held in a single stock.

Few stocks have generated wealth for long-term shareholders like Equity Bank, which has minted at least six individual billionaires since going public in August 2006.

The performance of the portfolios of Mr Mwangi and his wife, Jane Wangui Njuguna, attests to the long-term benefits that investors have continued to draw from the bank’s steady growth in the past 10 years to become the second largest lender in Kenya by profitability and asset size.

At Sh12.15 billion, the Mwangis’ stake represents an annual compounded growth rate of 50.4 per cent over the past eight years, a massive expansion from the 7.32 per cent stake valued at Sh464.2 million they held in 2006.

Equity’s wealth creation capability is even more significant considering the fact that the Mwangis have since sold Equity shares worth an estimated Sh1.7 billion, partly to comply with regulatory ownership limits imposed on executives of publicly traded firms.

Equity’s market valuation has risen from Sh6.3 billion in 2006 to Sh186.9 billion at the close of trading last week, representing a 52.7 per cent compounded annual growth.

Mr Mwangi currently holds 127.8 million Equity shares equivalent to a 3.45 per cent stake in the lender.

The Equity chief executive is also the beneficial owner of another 1.43 per cent stake through his entitlements in the bank’s employee share ownership plan.

This brings his total shareholding to 4.88 per cent, making him the single largest individual investor in the bank with a stake worth Sh9 billion.

As the CEO, Mr Mwangi’s ownership is capped at five per cent, meaning that at 4.88 per cent he is barely below the cap.

His wife, Jane, owns 60 million shares or a 1.62 per cent stake in Equity valued at Sh3 billion based on the current share price of Sh50.50, taking the family fortune to a total of Sh12 billion.

As far as wealth concentration goes in Kenya, the couple’s Sh12.15 billion stake in Equity is only comparable to businessman Chris Kirubi’s Sh12 billion fortune in investment firm Centum.

The Mwangi family also own shares worth over Sh3 billion in Britam, pushing the value of their known NSE portfolio above Sh15 billion.

Other notable stock market billionaires are Amin Nanji Juma, Baloobhai Patel, John Kibunga Kimani, Sunil Shah and Naushad Merali who own large stakes in a number of listed firms.

The Mwangis top the list of individuals whose ownership of Equity alone has placed them among Kenya’s super-rich. The list includes the bank’s chairman, Peter Munga, whose 0.42 per cent stake is currently worth Sh785.3 million.

Mr Munga, a billionaire, has previously sold Equity shares worth hundreds of millions of shillings. He held a 3.2 per cent stake in the bank in 2006 that would now be worth Sh6 billion had he not sold part of his portfolio.

Britam’s CEO Benson Wairegi, also a billionaire, owns a 0.25 per cent stake in the bank valued at Sh467.4 million. Mr Wairegi had a 0.78 per cent stake in Equity prior to the bank’s listing.

The family of the late Nelson Muguku, which has sold billions of shillings worth of shares, still retains a 0.89 per cent in the bank worth Sh1.66 billion.

The late Muguku was the second largest investor in Equity with an 8.34 per cent stake before the bank listed by introduction.

Equity’s list of the super-rich includes Andrew Kimani who has a 2.44 per cent stake worth Sh4.5 billion, Simon Thuo with a 0.72 per cent stake worth Sh1.3 billion and Franklin Ndii with a 0.57 per cent stake valued at Sh1.06 billion.

Mombasa-based billionaires – Janaksinh and Nirmala Babla — have a combined 0.35 per cent stake worth Sh654.4 million in the bank.

The Bablas have been accumulating banking stocks in the past few years and are now the largest individual investors in KCB, the country’s biggest bank.

Founders of Equity have benefited from its stellar performance that has attracted a host of new investors, pushing up the share price and ultimately inflating shareholders’ paper wealth.

Equity’s Sh7.6 billion net profit in the half year ended June was more than 21 times the Sh344 million it made in the whole of 2005 when the former building society converted into a commercial bank.

The bank’s half-year net profit was only second to KCB’s Sh8.1 billion with both lenders having benefited from higher interest and transaction-based incomes.

Equity, which revolutionised retail banking in Kenya with zero-balance accounts, has 8.9 million customers and has amassed Sh302.9 billion in assets.

The stellar performance has attracted large institutional investors, including private equity firm Helios that acquired a 24.45 per cent stake in the bank in 2007.

Thousands of individual investors have also bought into the lender, sustaining a long-term price rally despite a massive expansion of its share units.
The stock has gained 41.26 per cent in the past one year alone to trade at Sh50.50.

Equity now has 3.7 billion shares following a 10:1 split in 2009 and the creation of nearly 200 million shares in 2007 for issuance as bonus shares.

The share splits and bonus shares have seen the volume of Equity’s issued shares rise 40 times from 90.5 million units prior to its listing.