Muguku kin lose top shareholder position in Equity

The family of the late Nelson Muguku has lost its position as Equity Bank’s largest individual shareholders after it transferred shares worth Sh1.3 billion within the three months to December.

Details on the bank’s latest annual report show that Mr Muguku’s stake dropped to 2.03 per cent by December 2011 compared to 4.3 per cent in October—making James Mwangi, the CEO of Equity Bank, the top individual shareholder at the bank. The Muguku stake is now being held by Leah Muguku and it’s not clear whether the family sold the 71 million shares or distributed the stocks among the beneficiaries of the Equity stake that at one time was more than Sh5 billion.

Individual top shareholders of Equity Bank have since 2008 harvested billions of shillings from the sale of their shares after the end of a two-year-lock-in period for anchor shareholders that were attached to its listing at the Nairobi Securities Exchange (NSE) in 2006.
“The sale of the shares by top shareholders is a case of profit-taking as the business moves to maturity,” said Johnson Nderi, an analyst at Suntra Investment Bank.

Mr Muguku, who passed on in October 2010 at the age of 89 years built a multi-billion shilling business empire from humble beginnings.

The late Muguku’s family cut back its stock by 12.9 million shares within the nine months to September, earning about Sh250 million.

In 2010, Muguku’s family sold shares worth Sh1.2 billion and Equity said the sale was intended for purchase of Standard Chartered Bank former headquarters along Moi Avenue—which has been placed on auction after the bank found a new home in Westlands.

The Business Daily could not confirm whether the deal went through.

The value of the family’s stake held by Ms Muguku has risen from Sh522 million in 2006 to the current Sh1.42 billion, despite selling millions of shares.

Mr Mwangi has earned about Sh1.6 billion over the past three years from share disposals he said were dictated by regulations barring an executive director of a bank from holding more than five per cent of the institution’s capital.

His direct stake has dropped to 3.45 per cent from 5.49 per cent, but he has indirect interests through British American Investments and the bank’s Employee Share Ownership Plan (ESOP). Mr Mwangi’s direct stake is worth Sh2.42 billion.

Since the bank’s debut at the NSE on August 7, 2006, its stock has appreciated the most over the five-year period, opening the way for investors to skim their holdings at decent capital gains.

The share has appreciated by more than 900 per cent since listing when share splits and bonus stocks are taken into account.

Investors in Equity with a market value of Sh70.3 billion— have particularly attracted attention because of the speed at which the bank has created wealth for its owners, including employees, directors and founders.