Sometimes they are openly vocal, but more often they prefer to operate in the shadows, their words only appearing in court papers.
They are part of the so-called minority shareholders who are giving deep-pocketed multinationals a run for their money. Don’t be fooled by the term ‘minority shareholders’ — their stakes in some of the companies listed on the Nairobi Securities Exchange (NSE) may be small, but they are worth billions. They also have other investments outside the stock market.
They are rich, powerful and fearless. Also described as activist shareholders, these individuals, mostly local billionaires, have never hesitated to use their financial muscle to pursue what they believe is their right in listed companies.
In recent years they have taken on the controlling shareholders, mostly deep-pocketed multinationals, accusing them of shortchanging them. They have lost some battles and won others.
Ngugi Kiuna
For Ngugi Kiuna, who has been fighting BOC Kenya over its proposed takeover by Carbacid, the Capital Markets Authority (CMA) Tribunal may have dealt him a blow last week when it ruled that all the disclosures in the buyout bid had been followed. He still has the option of appealing to the High Court.
In the case of Mr Kiuna, a former chairman of BOC Kenya, he had challenged the takeover, which was initiated in November 2020, arguing that the capital markets regulator erred in approving the buyout by ignoring the undervaluation of the target company (BOC), in which he holds 11.2 percent stake.
Carbacid and its affiliate Aksaya Investments LLP offered to buy 100 percent of BOC Kenya for Sh63.5 per share or a total of Sh1.2 billion. Dyer and Blair Investment Bank, the independent adviser hired by the board of BOC Kenya, said the offer undervalued the company, which had a per share value of Sh91.76 as of early 2021.
Joel Kibe
But for Joel Kibe, the fight is still on. Mr Kibe, the sixth largest shareholder in Old Mutual Plc, wants the court to order the parent firm Old Mutual East Africa Holdings to buy him out at a premium or the insurance to be wound up so that he can liquidate his shares.
“Despite the representations made in the 2012 prospectus, Old Mutual Holdings Plc failed to list on the Nairobi Securities Exchange within 24 months following the public offer, as required by Regulation 19 of the Capital Markets (Securities) (Public Offers, Disclosures) Regulations, 2002,” Mr Kibe said in a letter to the CMA CEO Wycliffe Shamah.
Old Mutual took 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.
Mr Kibe told the court that Old Mutual, a South African financial services provider, had promised to list UAP’s shares on the Nairobi bourse in two years, allowing investors to exit the company.
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 has also taken issue with Old Mutual’s decision to issue preference shares, noting that this diluted the minority shareholders by nearly 40 percent. The decision to issue preference shares was taken without adequate disclosure or consultation, he says.
Other decisions by Old Mutual that Mr Kibe has taken issue with 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 tycoon is also concerned about what he describes as fraudulent borrowing practices, denying the minority shareholders access to company records and failure to comply with representations.
Joe Wanjui and Wainaina Kenyanjui
Another ongoing case pits the late businessman Joe Wanjui and Wainaina Kenyanjui, who own about 30 percent of listed Limuru Tea, against Unilever Tea.
The late billionaire businessman Joe Wanjui.
Photo credit: File | Nation Media Group
When the British multinational Unilever, which owns a majority stake in Limuru Tea, attempted to sell its shares to American fund CVC Capital Partner, Mr Kenyanjui and Wanjui, put up a spirited fight that culminated in the sale being blocked by the regulator, even as the sole owner of Africa Reit, Mr Kenyanjui, agitated for a seat on the listed firm’s board.
The two minority shareholders cited a litany of governance issues and alleged in court papers that Unilever was running Limuru Tea as an appendage, having appointed itself the agent, sole buyer, and only marketer of all the tea produced by Limuru.
To right some wrongs, Mr Kenyanjui, representing Wanjui while he was in the US, wanted to get a seat on the board of Limuru Tea.
Andrew Musangi et al
Central Bank of Kenya chairman Andrew Musangi.
Photo credit: Dennis Onsongo | Nation Media Group
Then there was the Unga Limited takeover, which was to have been acquired by the Delaware-based Seaboard Corporation, but which didn’t go through after vocal investors refused to sell their shares, arguing that the buyout offers undervalued the target company by large margins.
These recalcitrant shareholders included Andrew Musangi, the current chairperson of the Central Bank of Kenya, Kunal Bid, Rakesh Gadhi and Karim Jetha.
