Billionaire businessman Joel Kibe has sued Old Mutual Holdings, seeking to be bought out at a price likely to exceed Sh1 billion. He accuses the insurer of trampling on the rights of minority investors to benefit its majority shareholder, Old Mutual East Africa Holdings.
In an application to the High Court in Nairobi, Mr Kibe says the insurer has failed to list on the Nairobi Securities Exchange as promised and has taken huge loans from its parent on opaque terms.
He adds that some of the loans are to be converted into shares in the company, a move that will dilute small investors who have seen negligible returns from the investment.
Mr Kibe 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 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 make an order for the insurer to be wound up, 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,” reads one of the prayers.
This indicates that the suit is seeking over Sh1 billion based on the 18 percent compounded over the 10-year investment. The businessman has several investments in private and listed companies, including CMC Holdings, where he was among the investors bought out by Dubai’s Al-Futtaim Group.
Magistrate Josephine Wayua Wambua Mongare on Thursday ordered that the matter be mentioned on September 30, 2024, adding that the application should be served and responded to within 14 days.
In the meantime, the judge has prevented the insurer from trading its assets, incurring new debt or transferring funds out of Kenya.
When contacted for comment, Old Mutual Holdings Chief Executive Officer Arthur Oginga told Business Daily that the company’s legal team would respond next week.
Mr Kibe bought shares in UAP Holdings, which was renamed Old Mutual to adopt the brand of its ultimate parent, Old Mutual Limited, which acquired a 67 percent stake in the Kenyan insurer.
Mr Kibe, who also accused Old Mutual’s controlling shareholder of defrauding minority shareholders, told the court that he was misled by the insurer when it was selling shares to the public.
The businessman said the insurer had said it was going to list its shares on the NSE, which was supposed to give shareholders more liquidity.
Instead, its top shareholders sold their shares to Old Mutual in several transactions and the listing plan has not progressed.
“It is the petitioner’s case that through a pattern of premeditated and sustained oppressive and unfairly prejudicial behaviours by the respondent against the petitioner, the respondent has defrauded the petitioner of his entire investment of Sh246,678,351 and interest thereon for the last 10 years.”
According to court papers, the businessman received dividends of Sh7.23 million from the insurer in 2015, 2017 and 2018.
Preference shares take precedence over ordinary shares in the payment of dividends.
“The members were not invited to any meeting to deliberate on this issue though the same impacts on the value of their shares,” the petitioner told the court.
