The valuable SportPesa gaming brand was sold for £100,000 (Sh14.7 million) in June this year, triggering a fight among the founders of the sports betting platform, the Business Daily can reveal.
Pevans East Africa, the owner of the SportPesa trade mark, signed an agreement on June 2 to transfer the brand to UK-based Sportpesa Global Holdings Limited.
Pevans and Sportpesa Global share directors and shareholders but fell out over the transaction as the decision to transfer the brand was not unanimous.
Pevans’ chief executive Ronald Karauri signed the deed of assignment on behalf of the firm.
He would later emerge with a controlling 54.4 per cent stake in Milestone Games Limited, the company that was subsequently assigned the right to use the SportPesa trade mark in Kenya by Sportpesa Global in the roundabout deals.
Kalina Karadzhova, a Bulgarian national and a resident of the Isle of Man, signed the deed on behalf of Sportpesa Global where she serves as a director.
Kenyan entrepreneurs Paul Wanderi Ndung’u and Asenath Maina, who own a combined 38 per cent stake in Pevans, have accused Mr Karauri and the foreign investors of locking them out of the firm’s management and strategic decisions since 2017.
“In consideration of the sum of £100,000, the assignor hereby assigns to the assignee absolutely with full title guarantee all its rights, title and interest in and to the trade marks,” the agreement says.
“Any payments to be made to the assignor under this clause shall be set off against any amounts owed by the assignor to the assignee or any other member of the assignee’s group to the extent possible.”
It was not immediately clear whether Pevans received payments in the deal or if its liabilities to Sportpesa Global were defrayed in the process.
Mr Ndung’u, who holds a 17 per cent stake in Pevans, says the deal undervalued the SportPesa brand by billions of shillings.
SportPesa, which started operations in 2014, quickly became a popular brand in Kenya and globally thanks to heavy marketing, sophisticated gaming technology and record-breaking jackpots.
Pevans spent billions of shillings in partnerships and sponsorships of local and international sports teams, including Kenya’s Gor Mahia Football Club, UK’s Everton, Hull City, Arsenal and Formula One’s Racing Point.
The gaming platform is estimated to have a loyal customer base of 12 million in Kenya from which it generated revenues of Sh150 billion in 2018 alone.
The firm paid out Sh129.6 billion as winnings, leaving it with Sh20.1 billion that analysts reckon is enough to generate a profit in excess of Sh10 billion for a firm with thin operating expenses, mainly staff.
The Registrar of Trade Marks certified the transfer of the SportPesa brand on September 15, 2020, a day after receiving the application. The effective registration date was backdated to June 2 when the deed of assignment was recorded.
Sportpesa Global subsequently authorised Milestone to use the trade name in Kenya.
The move came after Pevans ceased operations following the cancellation of its operating licence in July last year over unpaid taxes and penalties amounting to Sh21.4 billion.
The move effectively brought back the popular SportPesa gaming brand by severing its ties with Pevans’ regulatory and tax problems.
“This letter notifies all interested parties that SportPesa Global Holdings Limited, being the registered and beneficial proprietor of the above stated trade mark in Kenya has granted a non-exclusive licence to M/s Milestone Games Limited in connection with the operations of Milestone Games Limited in Kenya,” Ms Karadzhova wrote in a letter dated October 26, 2020.
The multinational added that the licence was granted for a period of five years.
Milestone soon thereafter applied to the Betting Control and Licensing Board (BCLB), notifying the regulator that it would operate the SportPesa brand.
The regulator initially allowed Milestone to proceed but later cancelled the firm’s licence temporarily on October 30.
The BCLB said the decision was based on its records, which showed that the SportPesa trade name belonged to Pevans.
Milestone and BCLB are currently wrangling in and out of court, with the regulator accusing the firm of making important changes in its business, including ownership without seeking approval as required.
It has since emerged that Mr Karauri and Francis Waweru Kiarie have acquired a combined 95.3 per cent stake in Milestone through several investment vehicles, replacing the owners who obtained the licence from the regulator.
The two are also shareholders of Pevans in which Mr Karauri holds a seven per cent equity and Mr Kiarie one per cent.
“It has come to the attention of the board that the shareholding in Milestone Games Limited as at October 22, 2020, when its bookmakers licence was issued has since been changed in blatant breach of the aforementioned operation requirements,” BCLB wrote to Milestone on November 24.