Billionaire businessman Baloobhai Patel has exited the top 10 shareholders roll of troubled sugar miller Mumias. This marks a rare divestiture for the investor who was ranked fifth among top owners of the company.
The regulatory filings covering up to the end of May show Mr Patel, who owned 17 million shares equivalent to a 1.1 per cent stake of the company, is no longer on the top investors’ list.
The Treasury is the biggest shareholder of Mumias with a 20 per cent stake while Jubilee Insurance is the fourth largest with a 1.4 per cent ownership.
The second and third largest stakes are held in nominee accounts, which do not reveal names of beneficial shareholders.
Capital Markets Authority requires companies to disclose only the top 10 shareholders of all listed firms, and it is not clear whether Mr Patel has made a full or partial exit.
Mr Patel’s position as the single-largest individual shareholder of Mumias has now been taken by Abdul Popat, who has 14.4 million shares or a 0.94 per cent stake.
The billionaire entrepreneur could have earned up to Sh42.5 million from the share sale based on the company’s current share price of Sh2.5.
His exit from the top shareholders’ roll comes amid increased troubles for the sugar firm. Mumias has been beset by a sharp drop in sugar production, industrial strikes and claims of fraud by senior management that has coincided with its loss-making streak.
The company is among several in the local sugar industry that will face stiffer competition from March next year when their protection from cheaper imports from the Common Market for Eastern and Southern Africa (Comesa) ends.
Mumias cut its net losses by 93 per cent to Sh73.4 million in the half-year ended December compared to Sh1.1 billion a year earlier, helped by a 29 per cent cut in overall expenses.
Acting CEO Coutts Otolo recently told Bloomberg News that the firm will announce a second consecutive loss in the year ended June. The firm made a net loss of Sh1.6 billion in a similar period last year.
Mr Baloobhai’s exit is seen as reflecting the bearish outlook for the sugar miller.
The investor, who holds shares worth more than Sh3.7 billion at the Nairobi Securities Exchange, employs a long-term investment strategy that has seen him accumulate shares in blue-chip firms.
His biggest holdings include Pan Africa Insurance where he is a director and where his 19.9 per cent stake is worth Sh2.4 billion. Others are Bamburi Cement, Barclays Bank of Kenya, and DTB where his interest runs into hundreds of millions of shillings.
Mumias has attributed the drop in revenue to increased sugar imports, including illegal shipments, which have forced down prices, hurting its margins.
The company accused some of its top executives of engaging in illegal sugar importation that cost it more than Sh1 billion, with former CEO Peter Kebati being among those fired over the allegations.
The challenges have seen its share price fall to the current level, representing a decline of 43 per cent in the past one year and making it the worst-performing manufacturing stock.
Mr Otolo has announced plans to retrench up to 300 workers and to extend the tenor of its loans to ease pressure on the miller’s wage bill. The firm’s current workforce stands at about 1,700 employees.
He said the company is in talks with seven banks to reschedule a $57 million (Sh5 billion) debt.
Maturity of the loans is to be delayed by three to five years to boost the firm’s cash flow, which stood at negative Sh1.3 billion in December.