Companies

SportPesa founders earned Sh7.6 billion dividend in four years

SporPesa Karauri

SportPesa CEO Ronald Karauri. FILE PHOTO | NMG

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Summary

  • The payouts, disclosed in Pevans’ audited financial statements and management accounts seen by Business Daily, created new billionaires and expanded the fortunes of others who were already wealthy.
  • Mrs Maina and Nikolov earned gross cumulative dividends of Sh1.6 billion each, based on their stakes of 21 percent each in the company.
  • The documents show that Pevans started paying dividends in 2015 when it made a distribution totaling Sh1.57 billion.

Founders of Pevans East Africa –which pioneered betting in the country with the SportPesa brand— earned dividends totaling Sh7.6 billion in the four and a half years to June 2019.

The payouts, disclosed in Pevans’ audited financial statements and management accounts seen by Business Daily, created new billionaires and expanded the fortunes of others who were already wealthy.

Among those who scored big are foreign and local entrepreneurs including Mrs Asenath Wachera Maina, Guerassim Nikolov, Paul Ndungu, and Ronald Karauri.

Mrs Maina and Nikolov earned gross cumulative dividends of Sh1.6 billion each, based on their stakes of 21 percent each in the company.

Mr Ndungu earned Sh1.3 billion while Karauri got Sh535 million.

The documents show that Pevans started paying dividends in 2015 when it made a distribution totaling Sh1.57 billion. The shareholders had a banner year in 2016 when the firm paid a record dividend of Sh4.3 billion.

The payout fell drastically to Sh290.3 million in 2017 and rose to Sh876.5 million the next year.

Pevans paid a dividend of Sh559.9 million in the half year ended June 2019 and ceased operations soon thereafter when the government clamped down its operations over alleged non-payment of taxes that Kenya Revenue Authority (KRA) last computed at Sh95 billion.

This comprises a principal tax of Sh66.7 billion, a penalty (Sh13.3 billion), and interest (Sh14.9 billion).

Pevans achieved large-scale profitability in record time after launching operations in 2014, attracting increased government scrutiny amid concerns of increased gambling addiction.

The company stopped operating following the cancellation of its operating licence in July 2019 over unpaid taxes.

Some of the founders of Pevans including Mr Karauri subsequently transferred the SportPesa brand to a company called Milestone Games Limited which started trading in October 2020, sparking legal action from their partners who were left out of the new operation.

Milestone has been temporarily stopped from using the SportPesa trademark in a case filed by Mrs Maina who wants the court to affirm Pevans as the owner of the brand name.

Mrs Maina says the transaction, which she described as massively undervaluing the brand, did not receive the board and shareholders’ approval.

She asked the court to order the rectification of the trademark register by reinstating Pevans as the registered proprietor of trademark No. 74874 under class 41 known as Sportpesa.

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