Billionaire investor Baloobhai Patel has transferred his 4.12 percent stake worth Sh376.9 million in Bamburi Cement to his investment firm Aksaya as part of a succession and restructuring of his stock market portfolio.
The businessman previously held the shares directly.
The transfer of the stake to Aksaya occurred late last year when Mr Patel announced that his stakes in a Nairobi Securities Exchange-listed company including Carbacid Investments Plc will be migrated to the investment firm.
The changes are part of the succession plan by Mr Patel, 85, who previously owned listed equities alone before introducing his wife Amarjeet Baloobhai Patel as a co-owner in 2015.
Their son Rohan Patel, who runs the family’s property investments, has taken a more active role in managing the listed equities portfolio that is valued at billions of shillings.
Aksaya took over the Bamburi stake in a year when it remained unchanged. The businessman had spent more than Sh300 million to buy an additional 7.9 million shares of Bamburi in 2021, more than doubling his holdings to 14.9 million shares equivalent to a 4.12 percent stake.
The cement manufacturer’s share price has dropped to the current level of Sh25.2 from highs of Sh38 in the past 12 months as investors reacted to a dividend cut and reduced profitability.
Bamburi’s net income in the year ended December 2022 declined 86.9 percent to Sh181 million on the back of reduced sales and increased costs.
The company’s net profit retreated from Sh1.38 billion posted in the previous year as sales dropped by six percent to Sh38.99 billion.
Bamburi subsequently declared a smaller dividend of Sh0.75 per ordinary share, amounting to Sh272 million.
This marked a 79 percent cut from the Sh3.75 per share or a total of Sh1.3 billion paid out for the prior year.
Besides Bamburi, Aksaya is expected to take over Mr Patel’s 49.9 percent stake in Carbacid in a private transaction.
The parties had sought approval from the Capital Markets Authority (CMA) to implement the Carbacid shares transfer.
Besides consolidating Mr Patel’s stock market portfolio, the changes will also save him millions of shillings’ worth of taxes applicable on dividends in certain instances.
Individuals resident in Kenya pay a withholding tax of five per cent on the dividends they receive.
Local firms are exempt from paying withholding tax if they own a stake of more than 12.5 per cent.