NSE billionaires now open empires to family members

From left, Mr Bharat Thakrar, Mr James Mwangi
From left, Mr Bharat Thakrar, Mr James Mwangi and Mr Baloobhai Patel. PHOTOS | FILE |   NATION MEDIA GROUP

Stock market billionaires are increasingly introducing family members as co-owners of their wealth or ceding stakes to chosen heirs in a trend that signals their desire for orderly succession.

This is a marked departure from the tradition among Kenya’s super rich who have paid little attention to succession planning, leaving behind protracted battles over their estates.

WPP Scangroup’s chief executive Bharat Thakrar is the latest to make such a move, listing his wife Sadhna Thakrar as a joint owner of his 51.8 million shares in the marketing services firm worth Sh2 billion.

Mr Baloobhai Patel, who holds over Sh3 billion in multiple Nairobi Securities Exchange-listed companies, also recently introduced his kin, Amarjeet Patel, as a co-owner in each of the portfolios.

Other NSE billionaires who have directly or indirectly added their kin as co-owners in their stock investments include Equity Bank’s CEO James Mwangi whose wife Jane Njuguna holds more than Sh3.2 billion in Britam and Equity shares as a distinct investor.

Some of the super-rich, including John Kibunga Kimani, have opted to structure their wealth management plans through private deeds rather than directly introducing heirs to their NSE investment.

The actions taken by the top investors come at a time when inheritance of large estates has been fraught with disputes pitting family members against each other, leading to legal battles that have challenged wills drawn up by deceased patriarchs and matriarchs.

Introduction of the heirs to the NSE portfolios gives the nominated individuals a stronger claim to the assets based on his or her special status as a co-investor with supposedly equal powers to the founder.

Scangroup, for instance, now lists Mr Thakrar’s 13.68 per cent stake in the company as jointly owned with his wife, Sadhna, according to the latest annual report.

“I introduced my wife (to the portfolio). Previously it was in my name only,” Mr Thakrar told the Business Daily.

The entrepreneur retains a larger stake in the firm despite earning hundreds of millions of shillings from the sale of part of his Scangroup shares over the past few years.

Scangroup’s founding shareholders, including Mr Thakrar, have benefitted from the company’s growth in recent years powered by aggressive acquisitions that most recently saw the global marketing services giant WPP buy a controlling stake in the NSE-listed firm.

Mr Patel’s succession plan has revealed the true extent of the investor’s interests at the NSE where he holds one of the most diversified portfolios.

It shows that the duo – it was not immediately clear whether Mrs Amarjeet is a wife or daughter to Mr Patel – is effectively the single largest owners of investment and gas manufacturing firm Carbacid with a combined 25.9 per cent stake.

Mr Patel owns a 10.93 per cent equity in the company and Mrs Amarjeet the remaining 15 per cent, with their investing relationship only coming to light with the businessman’s move to list her as a co-investor in all his other portfolios.

These include a 20 per cent stake in Pan Africa Holdings, Bamburi (1.3 per cent), Centum (0.75 per cent) and Barclays Kenya (0.15 per cent).

Besides appending Mrs Amarjeet to his equities portfolio, Mr Patel has also appointed another one of his kin, Mr Rohan Patel, as an alternate to his directorship in Pan Africa Holdings.

The move signals the growing attention that the billionaire who hardly sells his shares – preferring instead to steadily build his position over the long-term – is paying to succession planning.

Besides stocks investments, Mr Patel also operates the tour firm Trans-world Safaris where he is the managing director.

Mr Kimani, who holds stocks worth over Sh3 billion under his name, told the Business Daily that his succession planning is being worked out privately and may not necessarily show in future shareholder lists as periodically disclosed by listed companies.

The investor, who started out as a squatter at the estates of agricultural firm Kakuzi, has a diversified portfolio including minority stakes in Nation Media Group (1.56 per cent) and East African Breweries (0.34 per cent).

Relatives of most of the stock market billionaires have stayed out of the public limelight, avoiding management roles including directorships in the portfolio companies where their families have significant ownerships.

This has seen men dominate the acquisition and management of large family fortunes, especially those concentrated in marketable securities like stocks.

There are more than 15 Kenyan men holding stocks worth billions of shillings, including Chris Kirubi, Jimnah Mbaru, Peter Munga, Naushad Merali, Amin Nanji Juma, Benson Wairegi, Gideon Muriuki and Pradeep Paunrana.

Lawyer Jane Wanjiru Michuki is one of the few female stock market billionaires with a 9.1 per cent interest in Britam worth Sh3 billion.

Mrs Michuki is the managing partner at Kimani & Michuki Advocates, a city law firm that advised Equity Bank ahead of its listing in August 2006.

She also bought a minority stake in Equity Bank in 2004 having acquired shares worth Sh10 million in a private placement that netted a total of Sh725.1 million, but it is unclear whether she still retains an interest in the lender.

Leah Wanjiku Muguku, a kin of the late business magnate Nelson Muguku, is also in the exclusive list of the stock market’s women billionaires with a residual 0.89 per cent stake in Equity Bank worth Sh1.5 billion.