Billionaire squatter raises stake in Kakuzi to 25 per cent

The battle for control of listed agricultural company Kakuzi has intensified after billionaire investor John Kibunga Kimani raised his stake to 25 per cent and launched a rare shareholder activism campaign meant to improve the lot of squatters and workers living in the farms.

Mr Kimani, 70, who started buying Kakuzi shares more than a decade ago, says he is using his large stake, currently worth Sh1.1 billion, to fight for fair treatment of the squatters on the company’s Murang’a farms where he grew up.

“I represent four generations of Kakuzi squatters and expect that I will use my stake in the company to protect the workers from mistreatment,” he said.

The company’s own records, for instance, show that it has over the years closed informal roads and footpaths in its properties in Makuyu, 65km northeast of Nairobi, making it difficult for thousands of squatters to access their homes.

Kakuzi’s security guards have also clashed with squatters who insist that they have a right to use part of the land owned by the company.

Kakuzi is among Kenya’s many big land owners who have had frosty relations with local communities over the manner in which they acquired large tracts of fertile land from the natives during the colonial times.

Land ownership battles pitting locals against foreign-controlled firms have intensified in recent years as the 999-year leases that companies like Kakuzi had expire.

The companies have previously owned the land on freehold and 999-year leaseholds but the 2010 Constitution allows foreigners to own land only through leasehold for a maximum of 99 years.

Foreign-dominated firms, which own thousands of acres, say it is unclear if the new cap on lease terms took effect from the date they were issued with land titles or from the date of enactment of the 2010 Constitution.

The National Land Commission (NLC) is yet to offer guidance on when the matter.

READ: Foreign firms face uncertainty over land

Mr Kimani said he had applied to the Capital Markets Authority seeking exemption from the take-over and merger rules that kick in once an investor’s equity reaches the 25 per cent mark.

“I am not planning to take over Kakuzi though I plan to raise my stake gradually to 29 per cent,” he said.

It remains to be seen whether the businessman’s increased shareholding will earn him the right to appoint one or more directors to the Kakuzi board. The firm mainly produces tea and avocado.

Mr Kimani says that while he is interested in nominating a director to the board, the company’s articles of association are silent on what entitles an investor to make such a move.

A director of Kakuzi, however, disputed Mr Kimani’s interpretation of his entitlements, adding that the businessman could sit on the company’s board if he wanted.

“With that level of shareholding, even the articles of association can be amended to bring him on board,” said the director who did not wish to be named.

“He has been approached informally before to become a director but he declined the offer — a perplexing decision for someone with such a significant stake.”

The Nairobi Securities Exchange-listed firm has eight directors, mostly nominees of UK-based Camellia Plc, which has a controlling 50.7 per cent stake. Camellia — which has agricultural, banking, manufacturing and insurance interests in 11 countries — is one of the British conglomerates that emerged after the UK’s parliament dissolved the notorious East India Company in 1874.

Starting with a single tea garden in India in 1889, the company expanded into other markets, including Kenya where it formed Eastern Produce, its other local subsidiary which grows tea.

It was not immediately clear when it bought into Kakuzi, which is the product of a 1966 merger between Kakuzi Fibrelands and Sisal Limited.

The amalgamated entity was the successor of agricultural ventures by settlers Donald Seth-Smith and Lord Cranworth who acquired some 25,000 acres in Murang’a’s former Kakuzi division.

The thousands of squatters at Kakuzi claim they are descendants of Kenyans who were dispossessed of their land after the colonial government rejected their customary land tenure rights in the 1930s.

The group lost any hope of returning to the land after the independence post-colonial government adopted a “willing buyer, willing seller” policy in the 1960s.

The free market policy saw wealthy Kenyans and well-connected politicians acquire the bulk of land previously held by settlers, leaving a legacy of squatters including those at Kakuzi.

Mr Kimani says that while Kakuzi is unlikely to ever donate land to the squatters, some of who work on its farms, it should accord them basic rights, including that of free movement within its properties.

The company’s closure of roads and footpaths has stoked controversy for decades, sparking protests in some instances.

Mr Kimani was born in one of the Kakuzi estates in 1944 and even worked for the company as a youngster. His education would later land him a long career as an agriculturalist.

His journey to becoming a billionaire began in the late 1970s when he started buying shares of publicly traded firms.

One of the most understated Kenyan billionaires, Mr Kimani’s steady investment has seen him accumulate shares in public listed companies worth over Sh3 billion.

He held a two per cent equity in Kakuzi for several years until 2006 when he started buying an average of 2.5 per cent stake per year to reach the current all-time high.

Mr Kimani has also accumulated major stakes at East African Breweries with shares worth Sh852 million, Nation Media Group (Sh748 million), Centum (Sh372 million) and Safaricom (Sh153 million) among other NSE-listed firms.

Despite his wealth and transformation, Mr Kimani says he feels a high sense of duty to his peasant roots.

“The welfare of Kakuzi squatters is very important to me. It weighs heavily on me. My Kakuzi shareholding is not just about investment,” he said.

It remains to be seen how the investor intends to influence the company’s uneasy relationship with the squatters.

His will be a rare form of shareholder activism in corporate Kenya as he prioritises Kakuzi’s relations with the community ahead of typical issues like investment returns and dividend policy.