The Old Mutual Holdings shareholder battle has put the spotlight on the ownership of three properties worth a combined Sh3.9 billion after the insurer distanced itself from the assets.
On August 22, billionaire businessman Joel Kibby, who owns 1.54 million shares in Old Mutual, obtained a court order preventing the company’s board from selling or transferring its assets — the Stock Exchange, Union House and Telkom Plaza, which house major institutional tenants in Nairobi.
The asset freeze and other restrictions on Old Mutual came after Kibi filed a case in the High Court in Nairobi, accusing the company of violating the rights of minority investors in favour of Old Mutual East Africa Holdings, its largest shareholder.
In response, the insurance company denied the allegations and stated that it did not own three of the listed properties identified by Mr. Kibi.
However, the insurer’s annual report shows that the properties were owned by its subsidiaries as of December 31, 2023. This suggests that the properties were later sold or that Old Mutual is technically disowning them in the court battle because it does not own their titles directly.
“I submit that the properties in question are not owned by the applicant (Old Mutual) and have therefore been wrongly included in the proceedings before this honourable court,” Arthur Oginga, CEO of the insurance company, said in a supporting affidavit.
“The court issued orders to prevent the sale of these assets on the basis of this claim. However, the defendant did not provide any evidence to prove the applicant’s ownership of these properties or the alleged imminent sale of the assets, which was the basis for the urgency he claimed in the application.”
The insurance company’s latest annual report showed that Equity Centre was owned by Old Mutual General Insurance Kenya Limited at the end of 2023 when the property was valued at Sh1.66 billion.
The property was leased to Equity Group – the country’s second-largest bank by assets. The same subsidiary also owned Telkom Plaza, worth Sh1.39 billion, during the same period.
Union House, valued at Sh860 million, was owned by Old Mutual Life Assurance Kenya Limited.
Old Mutual Holdings told the court that it holds controlling stakes in Old Mutual General Insurance Kenya Limited (100%) and Old Mutual Life Assurance Kenya Limited (55.7%).
The insurance company has asked the court to set aside the ex parte orders relating to the Stock Centre, Union House and Telkom Plaza, and to remove these properties from the proceedings.
“To the extent the impugned orders affect property not owned by the applicant, such orders are invalid and must be set aside,” Old Mutual said in its notice of claim.
The insurer also requested a general stay of the orders issued on August 22, arguing that the company is suffering significant damage due to its inability to deal with its assets, restructure its debts and pay its suppliers and policyholders.
Justice Josephine Waiwa Mungari on Friday did not vary the ex parte orders but directed that the matter be mentioned for directions on September 17.
Mr. Kibi has filed a lawsuit against Old Mutual Holdings seeking a takeover deal at a price likely to exceed Sh1 billion, citing several grievances, including non-distribution of dividends.
He said the insurance company failed to list on the Nairobi Securities Exchange as promised and took huge loans from the parent company on opaque terms.
He added that some of the loans will be converted into shares in the company, a move that would weaken small investors who received small returns on investment.
Mr. Kibii is the sixth largest shareholder in Old Mutual, having bought 1.54 million shares for Sh290.9 million in the over-the-counter market. The shares were purchased between July 15, 2014 and June 29, 2015.
He asked the court to order the company to buy his share for a premium or to issue an order to liquidate the insurance company, among other requests.
“It is ordered that the company shall purchase and/or redeem the petitioner’s shares at the price at which he purchased them with interest thereon at the rate of 18 percent per annum from the date of purchase,” he said.
This indicates that the application seeks more than Sh1 billion based on 18 percent compounded over the investment period of 10 years.
Old Mutual rejected Mr. Kibbe’s allegations, saying all of the company’s actions were publicly disclosed and were supported by shareholders and the board.
The insurance company said Mr. Kibi’s investment in the company did not guarantee him the required rate of return.
“The return on equity investments is not predetermined and can vary significantly,” Old Mutual said.