Squatters neighbouring agricultural firm Kakuzi #ticker:KUKZ have risen to the company’s list of top shareholders, raising the spectre of increased activism in the Nairobi Securities Exchange(NSE)-listed firm.
The Kakuzi Neighbourhoods Development Foundation -- a philanthropic outfit formed in 2018 to champion the welfare of the squatters — raised its holdings of the firm’s shares to 148,500 units in December, according to Kakuzi’s latest annual report.
This saw the squatters’ investment vehicle rank eighth in the list of top 10 investors in Kakuzi, with the shares having a current market value of Sh44.5 million.
The foundation is backed by billionaire investor John Kibunga Kimani who was raised in the farmland owned by Kakuzi.
The growth of the squatters’ stake in Kakuzi coincided with a slight but rare drop in Mr Kimani’s holding in the company — an indication that the billionaire may have transferred some of his shares to the squatters.
Mr Kimani’s stake in the agricultural firm rose steadily from two per cent in 2005 to 31.19 per cent in August last year before declining to 30.73 per cent in December, regulatory filings show.
Mr Kimani declined to comment on the matter when contacted by the Business Daily Thursday although he had earlier said that he planned to bequeath the squatters with up to 300,000 shares of Kakuzi worth Sh93 million as part of his giving to the community living around the agricultural firm.
It remains to be seen whether the squatters will remain passive investors or if they will use their newfound ownership as a platform to lobby for their alleged rights relating to access to land.
Communities in Murang’a have accused Kakuzi -- in which UK multinational Camellia Plc has a controlling 50.7 per cent equity -- of having acquired its thousands of acres of land in the area illegally during the colonial period.
The squatters’ stake adds to the growing pressures facing Kakuzi. A group of individuals asked the National Land Commission (NLC) to investigate historical land injustices regarding Kakuzi’s acquisition of its land holdings. The dispute went to court but NLC nevertheless issued a raft of orders against the agricultural firm.
“All leases for land held by Kakuzi in Murang’a County should not be renewed until the historical land injustice claim is heard and determined. Any 999 year leases to convert to 99 years,” reads part of the orders.
Kakuzi was also ordered to surrender all public utilities on its land, including schools, markets, police stations, hospitals, public roads of access and wayleaves.
The Kenya Human Rights Commission (KHRC) earlier this month led a celebration of NLC’s decision in Murang’a.
Kakuzi’s parent company, Camellia Plc, says it is closely monitoring the developments.
“The land claims have been refuted through the Kenyan legal system,” the multinational said in a trading update.
“A constitutional petition has been filed and also a request to stay the proceedings of the National Land Commission until the legal position has been determined. We continue to keep the situation under review.”
Kakuzi continues to invest heavily in existing and new crops including blueberries, signalling its confidence that the risks surrounding its land ownership will not be material.
The company’s share price has also held steady at Sh300, an indicator that current shareholders have not been spooked by the political and legal risks.
While Camellia can outvote all the other investors, the squatters’ growing stake raises the possibility of rocky relations with shareholders who may prioritise other objectives above the normal maximisation of earnings and dividends.
Mr Kimani earlier said the foundation will be focused on improving sanitation and educating bright students from poor families.
On the education side, it is envisaged that up to 20 students could be funded to join high school each year and later on to university.
The foundation has an advisory board, with Mr Kimani providing the funds to buy the shares in Kakuzi.
Establishment of the foundation, together with the businessman’s own direct investment in the agricultural firm, is set to raise his interest in the company to a new high.
Mr Kimani plans to raise his direct stake in Kakuzi to 39.9 per cent. This means that the billionaire and Camellia Plc are on course to hold more than 90 per cent of the agricultural firm’s shares.
Kakuzi’s executives, appointed by Camellia, have already written to the Capital Markets Authority (CMA) protesting Mr Kimani’s purchases, arguing that they are reducing the company’s free float and causing illiquidity for small investors.
The regulator, however, tolerates such concentrated ownership structures among publicly traded firms.
For instance, French oil giant Total S.A. owns 93.96 per cent of its local subsidiary Total Kenya.
Less than 15 per cent of BAT Kenya’s shares are in public hands, with its London-based parent company BAT Plc holding 60 per cent equity and the rest in the hands of various institutional investors.
While Camellia cited reduction of public shares in its letter, the multinational’s reaction is seen as being largely motivated by its discomfort with Mr Kimani’s association with the squatters.