The billionaires taking on big corporates for a fair shake

They are rich, powerful and fearless. These individuals, who are mostly local billionaires, are described as activist shareholders, and have never hesitated to use their financial power to pursue what they believe is their right in listed companies.

In recent years, they have attacked the controlling shareholders, mostly deep-pocketed multinationals, accusing them of cheating them. They have lost some battles and won others.

For Ngugi Kiuna, who has been battling the Central Bank of Kenya against a proposed takeover by Carbaside, the Capital Markets Authority court may have dealt him a severe blow last week when it ruled that all disclosures in the takeover bid had been complied with. He still has the option of appealing to the High Court.

In the case of Mr. Kiona, the former chairman of BOC Bank Kenya, he challenged the takeover, which began in November 2020, arguing that the Capital Markets Regulatory Authority erred in approving the takeover by ignoring the low valuation of the target company (BOC Bank), in which he holds an 11.2 per cent stake.

Carbaside and its subsidiary Axaya Investments have offered to buy 100% of Bank of Kenya for Sh63.5 per share, or a total of Sh1.2 billion. Dyer & Blair Investment Bank, the independent adviser appointed by Bank of Kenya’s board, said the offer undervalued the company, which was valued at Sh91.76 per share as of early 2021.

But for Joel Kibii, the battle continues. Kibii, the sixth-largest shareholder in Old Mutual PLC, wants the court to order parent company Old Mutual East Africa Holdings to buy his shares at a premium or liquidate the insurance so he can liquidate his shares.

“Despite the statements made in the 2012 prospectus, Old Mutual Holdings PLC failed to list on the Nairobi Securities Exchange within 24 months after the public offer, as required under Regulation 19 of the Capital Markets (Securities) (Public Offers and Disclosures) Regulations 2002,” Mr Kibi said in a letter to the CEO of the Kenya Capital Markets Authority, Wycliffe Shamah.

Old Mutual acquired effective control of UAP Holdings in 2015 after acquiring 37.33 percent of the total issued ordinary shares in the insurance company from AfricInvest Fund II Limited, AfricInvest Financial Sector Fund, Aureos Africa Fund LLC and Swedfund International Aktiebolag.

Kibe told the court that Old Mutual, a South African financial services company, had promised to list UAP shares on the Nairobi Stock Exchange within two years, allowing investors to exit the company.

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.

Mr. Kibi also criticised Old Mutual’s decision to issue preferred shares, noting that this diluted minority shareholders’ stake by about 40%. He says the decision to issue preferred shares was taken without adequate disclosure or consultation.

Other Old Mutual decisions that Keebee is challenging include the company taking loans without consulting minority shareholders, disposing of assets without proper disclosure, failing to pay dividends for the past seven years and excluding minority shareholders from key management and decision-making processes.

The business mogul is also concerned about what he describes as fraudulent borrowing practices, denying minority shareholders access to company records and failing to comply with representations.

Another ongoing case pits late businessmen Joe Wangui and Waina Kinyanjui, who owned about 30 percent of the listed Limuru Tea Company, against Unilever Tea.

When British multinational Unilever, which owns a majority stake in Limuru Tea, tried to sell its shares to US fund CVC Capital Partners, Kinyanjui and Wangwe fought a fierce battle that ended with the sale being blocked by the regulator, even as Africa REIT’s sole owner, Mr Kinyanjui, sought a seat on the listed company’s board.

The minority shareholders cited a long list of governance issues and alleged in court papers that Unilever was running Limuru Tea as an accessory, having appointed itself the sole agent, buyer and marketer of all tea produced by Limuru.

To right some wrongs, Mr. Kinyanjui, who represented Wangui while he was in the United States, wanted a seat on the board of the Limuru Tea Company.

Then there was the takeover of Unga Ltd., which was to be acquired by Delaware-based Seaboard Corporation, but it fell through after investors refused to sell their shares, arguing that the takeover bids undervalued the target company by a large margin.

Among these rebel shareholders are Andrew Musangi, the current governor of the Central Bank of Kenya, Kunal Beed, Rakesh Gadde and Karim Geetha.