The shareholder fight at Old Mutual Holdings has turned the spotlight on the ownership of three properties worth a total of Sh3.9 billion after the insurer distanced itself from the assets.
Billionaire businessman Joel Kibe, who has 1.54 million shares in Old Mutual, obtained a court order on August 22 that stopped the company’s board of directors from selling or transferring its assets — Equity Centre, Union House and Telkom Plaza, which house major corporate tenants in Nairobi.
The assets freeze and other constraints placed on Old Mutual came after Mr Kibe filed a case at the High Court in Nairobi, accusing the company of trampling on the rights of minority investors to benefit its majority shareholder Old Mutual East Africa Holdings.
In its response, the insurer denied the allegations and declared that it does not own three of the listed properties identified by Mr Kibe.
The insurer’s annual report, however, shows that the properties were owned by its subsidiaries as at December 31, 2023. This indicates that the properties were subsequently sold or Old Mutual is technically disowning them in the court battle since it does not hold their titles directly.
“I confirm that the properties in question are not owned by the applicant (Old Mutual) and have thus been wrongly included in the proceedings before this honourable court,” the insurer’s chief executive, Arthur Oginga, said in a supporting affidavit.
“The court orders restraining the sale of these assets were issued based on this assertion. However, the respondent did not produce any evidence to prove the applicant’s ownership of these properties or the purported imminent sale of the assets, which was the basis of the urgency claimed in the application.”
The insurer’s latest annual report shows 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 is leased to Equity Group –the country’s second-largest bank by assets. The same subsidiary also owned Telkom Plaza, with a value of Sh1.39 billion, in 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 has controlling stakes in Old Mutual General Insurance Kenya Limited (100 percent) and Old Mutual Life Assurance Kenya Limited (55.7 percent).
The insurer asked the court to discharge the ex-parte orders relating to Equity Centre, Union House and Telkom Plaza, and that the said properties be removed from the proceedings.
“To the extent that the impugned orders affect properties that are not owned by the applicant such orders are invalid and should be set aside,” Old Mutual said in its notice of motion.
The insurer also sought a general suspension of the orders issued on August 22, arguing that the company is suffering significant damage from its inability to deal in its assets, restructure its debt and pay suppliers and policyholders.
Justice Josephine Wayua Wambua Mongare on Friday did not alter the ex-parte orders but directed the matter to be mentioned for directions on September 17.
Mr Kibe sued Old Mutual Holdings seeking to be bought out at a price that is likely to top the Sh1 billion mark, listing multiple grievances, including lack of dividends.
He said that the insurer had failed to list on the Nairobi Securities Exchange as promised and had taken huge loans from its parent firm on opaque terms.
He added that some of the loans were to be converted into shares of the company, a move that will dilute small investors who have booked negligible returns from the investment.
Mr Kibe ranks sixth on the list of Old Mutual’s top shareholders, having bought 1.54 million shares for Sh290.9 million on the over-the-counter market. The shares were bought between July 15, 2014 and June 29, 2015.
He has asked the court to order the company to buy him out at a premium or an order be issued to liquidate the insurer among other prayers.
“An order that the company does purchase and/or buy the shares of the petitioner at the price he purchased them with interest thereon at 18 percent per annum from the date of purchase,” he said.
This indicates that the application seeks over Sh1 billion based on the 18 percent compounded over the 10-year investment.
Old Mutual rejected Mr Kibe’s allegations, saying all of the corporate actions were disclosed publicly and were backed by shareholders and the board of directors.
The insurer said Mr Kibe’s investment in the company does not guarantee him a desired rate of return.
“The return on equity investments is not predetermined and can vary significantly,” Old Mutual said.
