Quiver Lounge & Grill owner and SportPesa chief executive officer Ronald Karauri is entangled in a boardroom and shareholder war at Kenya’s newest insurance company in a battle that threatens to reveal secrets behind the firm.
The ownership row in Definite Assurance Company Limited, the newest insurer targeting public service vehicles (PSVs), started as soon as the Insurance Regulatory Authority (IRA) gave the company an operating licence on December 11 last year.
At the centre of the spat is the presence of Quiver Lounge owner Peter Mbugua in Definite, with his friends-turned-foes wanting him out of the firm and have quoted a divorce fee of Sh195 million.
Mr Mbugua had sought to exit before December 11 citing the long-winding search for an operational licence but is now staying put. He has offered to reluctantly sell his 22 percent stake to his foes for half a billion shillings.
“If I get Sh500 million, I will leave the company to them,” Mr Mbugua said in an interview.
“How does he expect the value of my shares to be the same before and after the licence? It is like agreeing to sell a Range Rover without engine, tyres and gearbox for Sh1 million then the buyer-to-be disappears for one month only to resurface when I have installed all these things and still wants to pay the same amount.”
As the battle rages, Mr Mbugua claims he has been sidelined by his partners and kept in the dark over the operations of them firm where he put in Sh175 million as seed capital. He is pointing an accusing finger at Mr Karauri, who has a 10 percent stake in the insurer.
The shareholder row marks a wobbly start for Definite Assurance in a market where it was hoping to rip up the PSV insurance playbook and buck the loss-making trend in the segment.
Mr Mbugua’s partners refused to yield and declared him persona non grata in the firm.
Businessman Kushian Muchiri, who has a 30 percent stake in Definite, claims that Mr Mbugua’s shares were sold and he should collect Sh195 million and leave.
“He (Mr Mbugua) resigned, signed shareholders and board resolutions, signed share transfer forms after which the shares were sold to raise his requested settlement of Sh195 million, up from the Sh175 million he had contributed,” said Mr Muchiri in response to our queries.
“The problem is that the shares already belong to the investor who signed off the shareholders' agreement. The Sh195 million is available whenever Peter requires it. He demanded all this process, he gave an offer, which was accepted and adopted.”
Official Business Registration Service (BRS) records indicate that the 22 percent stake is still under Mr Mbugua’s Swingers Skypark.
Other shareholders are Mikaj Topgrains Company Limited (25 percent), Lydra Ventures Limited (five percent), Jekelusahe Limited (five percent), Monday Maxine Kerubo Oyugi (three percent), Cecily Muthoni Wairimu (three percent) and Patrick Ndirangu Kibuthu (two percent).
Mr Mbugua and Mr Karauri were key in the formation of the insurer as key financial backers.
Mr Muchiri was brought on board given his networks in the matatu business which he gained from years of managing Kenya Mpya buses that ply Nairobi-Thika route.
Matatus are the focus of Definite Assurance, which is seeking to exploit the gap left with the collapse of Invesco Assurance and Xplico—top players in the segment that generates premiums of about Sh5.5 billion annually.
Market leader Directline Assurance, which is majority-owned by businessman and media mogul Samuel Kamau Macharia (SK Macharia), is embroiled in a shareholding row and regulatory spats.
Mr Mbugua claims to have made his money in the alcohol business, having started small and grown into Quiver Lounge bar chain that has recently become a household name on Nairobi's nightlife scene. The bar chain has bars in Kilimani, Kitengela, and Eastlands as well as on Thika Superhighway and Mombasa Road.
Mr Karauri, who is also the Member of Parliament for Kasarani Constituency, made his money in Pevans East Africa—which pioneered betting in the country with the SportPesa brand.
Pevans paid Sh7.6 billion in dividends in the four and half years to June, creating new billionaires and expanding the fortunes of owners like Mr Karauri who also doubled as CEO.
In Definite Assurance, Mr Karauri and Mr Mbugua were a perfect pair.
Mr Mbugua put in Sh75 million to fund the initial set-up and operational costs and another Sh100 million as part of capital.
Mr Karauri invested Sh500 million to top up the Sh600 million minimum capital that is required to start a general insurance company in Kenya.
Trouble in paradise emerged in early November when it appeared that Definite Assurance was struggling to get approval from the IRA.
Mr Mbugua wanted out and his money. He demanded his Sh175 million and a margin of Sh20 million, shocking his partners.
He informed the IRA commissioner Godfrey Kiptum on November 13, 2024 in a letter seen by the Business Daily that he was “no longer interested” in the business and was on course to withdrawing his shareholding.
Mr Karauri agreed to buy the shares in a transaction that would have made him the top owner with 32 percent shareholding.
However, Mr Mbugua claims that despite approval from the board for the sale, the paperwork for the share transfer stalled as Mr Karauri went silent.
He reckons the SportPesa boss reached out to him days after the IRA had offered the firm the operational licence, seeking to complete the deal.
With the licence out, Mr Mbugua changed his mind and valued the 22 percent stake multiple times because the regulatory risk had been eliminated.
His new valuation jumped to Sh500 million, sparking resistance from Mr Karauri and Mr Muchiri.
Mr Karauri did not respond to a request for comment.
Mr Muchiri, who claims to speak on behalf of the firm, reckons that the share sale deal was completed at Sh195 million and pending paperwork.
Mr Mbugua has threatened court action, accusing his partners of running the show behind his back.
“Our client notes that there are additional persons/directors to the company. The said persons are strangers to our client who holds a substantial 22 percent stake,” Mr Mbugua said in a letter to the firm through lawyer Dunstan Omari.
“Our client has noted that attempt to manipulate the directorship of the company. We shall move to protect our client’s interest in the company by instituting legal proceedings,” the lawyer added in the letter seen by the Business Daily.
