Companies

UK firm fights for Kakuzi with billionaire squatter

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Tea picking at a farm: Inset is Mr Christopher Flowers, Kakuzi managing director. FILE PHOTOS

The battle for control of agricultural firm Kakuzi #ticker:KUKZ has intensified after UK-based Cammelia Plc accused the Capital Markets Authority (CMA) of authorising billionaire investor John Kibunga Kimani to accumulate shares in the company without following due process.

Mr Kimani, whose ownership has shot from two per cent in 2005 to 30.3 per cent worth Sh1.9 billion currently, wants to further raise his stake to 39.9 per cent having hit his initial target of 29.9 per cent.

The self-made billionaire was brought up in Kakuzi’s estates and has expressed solidarity with squatters living around the company’s land holdings.

His increased share purchases have spooked Cammelia, the major shareholder, that has identified land ownership as the major risk facing its local operations.

Cammelia, through its executives at Kakuzi, recently wrote to the CMA accusing the regulator of authorising Mr Kimani’s increased share purchases after they have happened.

The UK-based firm also argues that Mr Kimani’s personal stake comes with no supply of management or technical support, does not serve the public interest and amounts to an abuse of the policy of maintaining local shareholding for strategic reasons.

“The board of Kakuzi Plc is perturbed by a number of aspects of this matter. In particular (a) Due process has not been followed. At no time did Mr Kimani file a notice of intention to acquire as required under the regulations,” Kakuzi’s managing director, Christopher Flowers, wrote in an April 16, 2018 letter to the CMA.

Besides, “the grounds cited for granting of the exemption do not appear to hold any substance in fact.”

The CMA declined to comment on this story.

Documents seen by the Business Daily, however, show that the regulator approved Mr Kimani’s share purchases after he was exempted from the requirement to make a takeover offer for Kakuzi.

“The authority is satisfied with the disclosures made in relation thereto and the justifications given and consequently grants you an exemption,” says a December 24, 2014 letter to Mr Kimani.

The regulator had at the time capped Mr Kimani’s stake at 29.9 per cent.

The investor last year persuaded the CMA to raise the ceiling to a new high of 39.9 per cent, drawing the protest from Cammelia.

“There is little liquidity in the shares today and this will only deteriorate as Mr Kimani increases his stake,” Mr Flowers wrote.

Board seat

While Cammelia can outvote any other shareholder at Kakuzi, the multinational fears that Mr Kimani’s enlarged stake and his historical ties to the squatters could heighten the land ownership risk.

Kakuzi’s chairman, Graham Mclean, declared at the firm’s annual general meeting in May that there is no vacancy on the board after a section of minority shareholders called for Mr Kimani’s appointment as a non-executive director on account of his large stake.

READ: Kakuzi rejects billionaire’s bid for boardroom position

ALSO READ: Billionaire squatter raises stake in Kakuzi to 25 per cent

Cammelia has told its investors that one of its major risks is “long-term political issues over land ownership in Kenya, Malawi and South Africa.”

The multinational warned them to be prepared to pay more for existing property (for example if freeholds become leaseholds), adding that it could also lose access to farms and estates.

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 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 expired.

The companies 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 the matter.

Cammelia says it is managing the land risks through use of lawyers and maintaining collaborative relationships with governments at local and national levels.

READ: Kibunga ownership in Kakuzi hits 30pc

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