Tycoon ups Kakuzi shareholding to 26.1 per cent

Billionaire investor John Kibunga Kimani has bought an additional 1.1 per cent stake in Kakuzi, taking him closer to owning the targeted 29 per cent shares of the NSE-listed agricultural company.

The latest shareholder filings made to market regulators show that Mr Kimani’s equity in the firm had risen to 26.1 per cent in May, up from 24.9 per cent in December.

The extra stake is currently valued at Sh81 million, which raises the investor’s total interest in Kakuzi to Sh1.8 billion.

Mr Kimani in February told the Business Daily that he does not intend to take over Kakuzi, but only wants to build up his stake to 29 per cent.

The share purchase has cemented his position as the second largest owner in the company after UK-based Camellia Plc which is the controlling shareholder with a 50.7 per cent stake.

It has brought him closer to achieving his ownership target, sparked a rally in Kakuzi’s shares when it was first announced publicly.

The Nairobi Securities Exchange-listed company’s stock has gained 77.3 per cent since Mr Kimani’s February announcement of his intention to buy an extra four per cent stake to close at Sh360 in Wednesday’s trading.

READ: Billionaire squatter raises his stake in Kakuzi to 25pc

Similar share purchase announcements in the past have attracted speculators seeking short-term gains, leading to major price rallies, including that of Centum when Mr Chris Kirubi announced his intention to buy an extra five per cent of the company.

Mr Kimani has steadily accumulated his Kakuzi shareholding to the current level from a low of two per cent in 2005, buying an average of 2.5 per cent equity per year.

Prior to hitting the 25 per cent mark, the investor applied to the Capital Markets Authority seeking exemption from rules that require an investor to make a takeover bid for listed firms once their cumulative shareholding crosses that threshold.

Besides dividends and capital gains, Mr Kimani has bought into Kakuzi due to his historical association with the company on whose estate he was brought up as a squatter.

The businessman’s increased shareholding has not, however, earned him the right to appoint one or more directors to the board of the company.

Other listed firms including Pan Africa Insurance Holdings have invited significant owners with less than 25 per cent stakes to serve on their boards as directors.

The company’s articles of association are silent on what entitles an investor to either seek a board position or appoint a director to represent him.

A director of Kakuzi, however, disputes Mr Kimani’s interpretation of his entitlements, adding that the businessman could have joined the company’s board if he was interested.

Kakuzi currently lists eight directors, mostly nominees of Camellia Plc. The firm recorded a 2.9 per cent net profit drop in the year ended December as costs rose faster than sales.

Its net profit in the period stood at Sh160.2 million compared to Sh165 million the year before.

This came as sales jumped 22 per cent to Sh1.6 billion, with the cost of production rising 16.4 per cent to Sh1.1 billion.

Distribution costs also increased 37.1 per cent to Sh487.3 million. Kakuzi’s core produce is tea and avocado.