Billionaire businessman Joel Kibe has filed a lawsuit against Old Mutual Holdings, seeking to buy it for a price likely to exceed Sh1 billion. Kibe accuses the insurance company of violating the rights of minority investors in favour of its largest shareholder, Old Mutual East Africa Holdings.
In an application to the High Court in Nairobi, Mr. Kibi said the insurance company failed to list on the Nairobi Securities Exchange as promised and took huge loans from its parent company on opaque terms.
He adds that some of the loans will be converted into shares in the company, a move that will weaken small investors who have not received any significant returns on their investment.
Mr. Kibi is the sixth largest shareholder in Old Mutual, having bought 1.54 million shares at a cost of Sh290.9 million on the open 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 wind up 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,” one of the prayers read.
This suggests the suit seeks more than Sh1 billion based on the 18% compounded investment over 10 years. The businessman has several investments in private and listed companies, including CMC Holdings, where he was among the investors bought by Dubai’s Al Futtaim Group.
Justice Josephine Waiwa Mungari on Thursday ordered the matter to be mentioned on September 30, 2024, adding that the application must be filed and responded to within 14 days.
Meanwhile, the judge barred the insurance company from trading its assets, taking on new debts, or transferring money outside Kenya.
When contacted for comment, Old Mutual Holdings CEO Arthur Oginga told Business Daily that the company’s legal team would respond next week.
Mr. Kibi bought shares in UAP Holdings, which was renamed Old Mutual to adopt the brand of its ultimate parent company, Old Mutual Limited, which acquired a 67 percent stake in the Kenyan insurance company.
Kibi, who also accused Old Mutual’s controlling shareholder of defrauding minority shareholders, told the court he was misled by the insurance company when it was selling its shares to the public.
The businessman said the insurance company had said it would list its shares on the National Stock Exchange of India, which was supposed to give shareholders more liquidity.
Instead, major shareholders sold their shares to Old Mutual in several transactions, and the listing plan did not move forward.
“The petitioner’s case is that through a pattern of deliberate, sustained, unfair and unjustly biased conduct by the respondent against the petitioner, the respondent defrauded the petitioner of his entire investment of Shs246,678,351 and interest thereon for the past ten years.”
According to court documents, the businessman earned profits of Sh7.23 million from the insurance company in 2015, 2017 and 2018.
Preferred stock has priority over common stock in the payment of dividends.
“The members were not called to any meeting to deliberate on this matter despite the same effects on the value of their shares,” the offeror told the court.