Kenyan investors mint billions from Old Mutual buyouts

Money Markets

Mr Joseph Wanjui (left) and Mr Chris Kirubi have earned billions of shillings from Old Mutual buyouts. PHOTOS| FILE 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• Business magnate Joseph Wanjui tops the list of beneficiaries with Sh4 billion gain from UAP stake.
• Businessman Chris Kirubi pocketed Sh3.6 billion, before tax, after selling his 9.58 per cent equity in UAP to the multinational while the founders of Faulu Bank.
• The recent windfalls add to Mr Josphert Konzolo’s receipt of millions of shillings in 2010 when Old Mutual acquired a 70 per cent stake in stockbroker Reliable Securities where he was the principal shareholder.

UK financial services group Old Mutual’s aggressive purchase of Kenyan companies has earned local investors billions of shillings while unlocking value for the remaining shareholders whose portfolios have more than doubled in seven months.

Topping the list of investors who have gained billions from the sale of their companies to the UK firm is Joseph Wanjui, the chairman and the biggest individual owner at UAP, whose stake is now worth Sh7.7 billion based on the Sh180 per share price at which Old Mutual bought out his co-investors.

Businessman Chris Kirubi pocketed Sh3.6 billion, before tax, after selling his 9.58 per cent equity in UAP to the multinational while the founders of Faulu Bank, a microfinance institution, earned Sh3.6 billion from Old Mutual’s acquisition of a 67 per cent stake in the firm last year.

The recent windfalls add to Mr Josphert Konzolo’s receipt of millions of shillings in 2010 when Old Mutual acquired a 70 per cent stake in stockbroker Reliable Securities where he was the principal shareholder.

Old Mutual’s acquisition binge, including the UAP takeover, takes the entrepreneurial career of Mr Wanjui, who navigated childhood poverty and colonialism, to a higher rung.

The businessman, who is a close ally of former president Mwai Kibaki, believes luck, hard work and gumption are the most critical success factors in life.

“Quite a bit of it was through luck, but a lot more came through very hard work,” Mr Wanjui writes in his autobiography My Native Roots: A Family History.

“Even where luck and circumstance play a role, as they do in any situation, every chance they provide must be pursued and grabbed with both hands. I took advantage of the many breaks that came my way.”

One such opportunity came in 2000 when French multinational AXA was selling its interest in UAP and Mr Wanjui teamed up with other local investors to fully acquire the insurance company.

Kenyan investors previously owned 40 per cent of UAP — a company that had changed hands several times following mergers and restructurings by its parent firms.

The deal left Mr Wanjui as the single-largest shareholder with a 35.84 per cent stake that has since dropped to 20.4 per cent with the entry of new investors in subsequent years.

The smaller stake is, however, worth much more in tandem with the company’s recent expansion in the local and regional markets where it is offering general and life insurance.

READ: Down memory lane with Joe Wanjui

Prior to his purchase of UAP shares, Mr Wanjui had served in top executive positions at firms like East Africa Industries and Industrial and Commercial Development Corporation (ICDC), which was set up to support Kenyan entrepreneurs in the commercial sector that was at independence dominated by Whites and Asians.

Based on UAP’s over-the-counter (OTC) price of Sh86 in June last year, Mr Wanjui’s portfolio was at the time worth Sh3.7 billion. That has, however, surged to Sh7.7 billion, amounting to a Sh4 billion gain in just seven months.