Lifestyle

Billionaire investor Naushad Merali dies at 70

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Businessman Naushad Merali. FILE PHOTO | NMG

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Summary

  • President Uhuru Kenyatta eulogises him as a top industrialist whose businesses created thousands of jobs, helped stabilise the economy.

Billionaire businessman Naushad Merali, who built his wealth from diverse investments including telecommunications, manufacturing, agriculture, banking and real estate is dead. He was 70.

A statement from Shia Ithna Ashri Jamaat Secretariat broke the news of his demise on Saturday morning, without disclosing the cause.

“It is with profound grief and sorrow that we inform you of the sad demise of Dr Naushad Noorali Merali in Nairobi. He was a businessman and owner of Sameer Group,” read the statement.

Merali made his wealth by first purchasing unprofitable companies and turning them around in his formative days as an investor. He would then exiting at a profit—sometimes attracting criticism when the new buyers failed to profit from the deal.

In 2015, Forbes ranked him as the third richest man in Kenya and 48th in Africa with a net worth of Sh39.96 billion ($370 million).  

In recent years, he divested from ICT firms including Swift Global, Kenya Data Networks, Airtel Kenya (formerly KenCell) and Spire Bank (then Equatorial Commercial Bank)—raking in billions of shillings in the process.

It is these major sell-offs that lifted his profile. That of KenCell and Spire Bank are among the many that stand out.

Merali owned 40 per cent of the Airtel (then KenCell Communications) jointly with its French partner Vivendi in 2000. Three years later, when the French firm decided it was time to leave Kenya, Merali used his pre-emption rights to play one of the smartest boardroom chess games that pitted a number of global telecoms giants --South Africa’s MTN and Celtel-- against each other for Vivendi’s stake.

He bought the Vivendi stake in KenCell at $230 million and sold it to a new partner, Celtel International, the very same day for $250 million— earning a sumptuous profit of $20 million.

“I started doing buyouts long before the word became fashionable in Kenya,” he once remarked.

READ: Merali exits Airtel board after 15 years

Buyouts

In 1975 for instance, two years after joining Ryce Motors as a finance director, he convinced the owner, Frank Ryce, to sell to him the firm.

His next acquisition was in 1983 when he founded Equatorial Bank, then operating as a finance house. About 30 years later, he sold it to Mwalimu National Sacco attracting controversy.

This is after the revelation that he withdrew Sh1.7 billion from Spire Bank (formerly Equitorial) days after selling it to teachers’ Sacco, hurting the prospects of the lender.

Mwalimu first acquired a 75 percent stake in the bank from Merali followed by another 25 percent stake last year amid mounting losses and wiped out capital.  

Merali’s huge withdrawal in 2016—then a fifth of the bank’s deposits— prompted other customers to remove deposits from the bank, according to recent revelations by Spire Bank officials.

READ: Merali’s Sh1.7bn withdrawal that sank teachers' Spire Bank

Sameer

Merali bought the Firestone US stake in Firestone East Africa in 1985 with bank loans, rebranded the well-known tyre brand into Yana Tyres and made a fortune when the company, which he renamed after his son Sameer, was floated on the Nairobi Stock (now Securities) Exchange.

Sameer N Merali joined the company in 2003 as a non-executive. He is currently the CEO of Sameer Investments and chairman of Ryce East Africa and Nandi Tea Estates.

His father's death comes at a time Sameer Group #ticker:SMER is struggling to make money in its traditional business of tyres.

In 2016, Sameer stopped manufacturing tyres, opting to import citing stiff competition from markets such as China.


The Merali-owned firm would then in April last year announce that it was quitting the tyre business to seek fortunes in property investment. But it later announced a turnaround to tyre business.

Sameer Africa fully owns Sameer Industrial Park and Sameer Export Processing Zone.

The firm also has a stake in Sameer Business Park—a complex commercial office along Mombasa road, Nairobi.

Philanthropy

Merali often shied away from the limelight but was rather proud of the Zarina and Naushad Merali Foundation, a charity he ran together with wife Zarina.

In his message of condolence, President Uhuru Kenyatta eulogised him as a top industrialist whose businesses created thousands of jobs, helped stabilise the economy.

"Merali's business acumen created thousands of direct and indirect jobs for our people and wealth that helped uplift many of our households from poverty. Alongside his celebrated business exploits, Mr Merali was a philanthropist whose generous giving earned him the 'Chief of the Order of the Burning Spear' state commendation," the President said in a statement.

He leaves behind his wife Zarina, and children Sameer and Yasmin.