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Michael Matu: The CEO who never gave up leaves the scene

Michael Maina Matu
Mr Michael Maina Matu was chief executive of Olympia Capital until his death this week. FILE PHOTO | NMG 

Michael Maina Matu’s two-decade reign as group chief executive of Olympia Capital Holdings #ticker:OCH was a mixed pot of success-turned-failure and optimistic tests.

He died this week.

A decade into his reign as GCEO, shareholders rewarded him with a 102 percent rights issue success in 2007 when he led the firm with operations in Kenya, Botswana and South Africa in seeking fresh capital totaling Sh420 million for a planned expansion into South Africa.

Using the proceeds, he bought the Yokota brand name and the manufacturing plant belonging to Natural Wooden Products Limited from the liquidators of Plush Products.

Olympia had earlier on purchased a 74 percent stake in South Africa’s Plush Products as part of the regional expansion strategy and by 2007, Natwood and Plush had 450 employees.

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Part of the proceeds were also spent on refurbishment of its Nairobi factory by a South Korean company.

While the firm enjoyed an unrivalled dividend run in the first decade, Mr Maina said South Africa suffered a recession that adversely affected their operations there and they consequently closed through forced liquidation.

“Unfortunately, we used a lot of debt to fund the acquisition and to fund the operations of the business with high levels of turnover. With the economic slowdown, our debt-driven business model was not tenable. We did not exit voluntarily, our businesses were liquidated,” he said in a 2010 interview.

Being a never-to-give up executive, Mr Maina would venture back to South Africa under a different business model, selling their branded products.

The South African failure would come to haunt him a year later when shareholders meeting in Nairobi questioned the firm’s investment strategy, governance issues and its disastrous foray into South Africa which they said risked sinking the once profitable firm into perpetual ruin.

Mr Maina insisted they were on a path to recovery where one shareholder pointed out that their 2009 minutes lacked an observation made a year earlier by an auditor that the firm lacked proper governance structures for listed firms.

“The auditor apparently made a similar remark in the last AGM, but that was omitted from the minutes of the meeting presented today,” noted a shareholder at the 2009 AGM.

The directors assured shareholders all was well and that consultants would help them to address corporate governance but shareholders accused the directors of paying lip service.

Then, a new issue arose where directors were accused of taking unsecured loans amounting to Sh18.3 million to which Mr Maina owned up, saying he was the sole loanee and that he used it to buy a house and a car.

The disclosure raised disquiet within the top company echelons that resulted in Mr Maina being forced out two years later to take up a newly created deputy chairman’s post while Kenneth Kareithi, then heading a subsidiary Mather and Platter, became the group’s new CEO.

Mr Maina’s stay in the cold was short-lived as he wrote to Nairobi Securities Exchange (NSE) two years later, informing them he had taken over as CEO and that Mr Kareithi had been thrown out.

Mr Kareithi sued the company for wrongful dismissal and was last year awarded Sh233,750 plus costs by the Employment and Labour Relations Court.

His return saw the firm’s share price fall to a one-year low of Sh2.50, indicating a backlash by shareholders who were unhappy with his return.

To win back confidence among shareholders, Mr Maina adopted a new strategy where the firm moved its listing from the Industrial and Allied segment to the Investment segment, reflecting its new expanded lines of business.

“One of the reasons why we migrated from the Industrial and Allied segment is to send a message that we have become an investment company. We are in the building material sector, property, venture capital fund and lastly we intend to go into the food sector,” he said.

In an interview with the Business Daily last year, the listed firm announced a Sh5.74 million net profit for the year ended February 2019, being an improvement from 2018’s reported loss of Sh3.48 million.

The profit was significantly lower than the Sh45 million posted in 2014 or Sh53.26 million of 2009, the best performance in 12 years.

Last year, the firm also cut its borrowing by Sh7.45 million to Sh86.6 million despite the rise in finance costs.

The firm listed on the NSE in 1976 oversees operations of its subsidiaries including Avon Rubber Company, Olympia Capital Corporation, Mather and Platt Limited and Olympia Capital Corporation Limited.

The company, through Olympia Capital Corporation (Pty) has interests in Kalahari Floor Tiles (Pty) Limited and Gaborone Enterprises (Pty) Limited, both in Botswana.

Recently, it announced plans to close two of its loss-making subsidiaries Dunlop Industries and Cape Town-based Tiespro Trading.

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