Inside the new struggle for control of Naivas

The family of the late Peter Mukuha Kago — the founder of Naivas, the country's leading supermarket chain — is rocked by fresh wrangles over control and ownership of the retail giant.

At the centre of the new wrangles is an application by Ms Grace Wambui, one of the daughters of the late Kago, to be appointed administrator of the family empire.

Ms Wambui wants the court to rectify a grant made to her late brother Simon Gashwe.

Gashwe, the former chairman of Naivas Supermarkets, died at the Aga Khan Hospital in Nairobi in August 2019.

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The late Gashwe, who records show owned 25 per cent of Naivas shares, was the administrator of his father's entire estate. He was appointed sole administrator of the empire on May 6, 2010.

Ms Wambui, who wants the court to declare her the administrator, filed an application for rectification of the grant at the Nakuru High Court on May 29.

She wants the court to remove Gashwe's name and substitute it with hers.

In court papers, Ms Wambui says Gashwe was appointed with the consent of the family members to administer the estate and distribute it among family members and pay debts.

Need an administrator

"He was appointed as the sole administrator of the estate but died before he could complete the administration. There are also some other properties of the estate of the late Peter Kago Mukuha that have not been properly distributed and they need an administrator and/or administrators to resolve the disputes," Ms Wambui says in court papers, adding that her late father's estate has been sued and several cases are pending in court.

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Ms Wambui also says she has no objection to her elder brother Newton Kagira Mukuha's application to become one of Naivas' directors.

“I and my brother Newton Kagira Mukuha can be appointed as administrators of the estate of our late father Peter Kago Mukuha, to continue administering it until cases pending in court are complete,” she adds in court papers.

Ms Wambui says her brother David Kimani Mukuha should not be allowed to stop her and Mr Kagira from being appointed as administrators.

She also claims that she is aware of other properties in the estate that are yet to be distributed.

And at the Milimani courts in Nairobi, Mr Kagira, the eldest of the three Naivas brothers who have been locked in a gruelling battle for control of Naivas Supermarkets since 2013, has renewed his fight for the retail chain.

Mr Kagira has been feuding with his younger brothers for control of the multi-billion-shilling business since 2013.

Mr Kagira accuses his brothers, the late Simon Gashwe and Mr Kimani, of fraudulently colluding to exclude him as one of the registered owners of Naivas, thereby denying him both his and his father's shares.

In March 2023, Mr Kagira hired top law firm Ahmednasir Abdullahi Advocates LLP to represent him in the latest legal battle for a stake in the giant retail chain.

Lawyers at Ahmednasir Abdullahi Advocates LL, entered the case with a letter to the Registrar of Companies, seeking the current shareholding structure of Naivas Ltd.

The law firm also asked for any changes to the company following the recent acquisition of shares by private equity firms, as well as copies of all returns filed by the retailer since it started operations.

And last week, Naivas Ltd denounced Mr Kagira as a stranger claiming shares in the giant retailer.

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In its defence at the Milimani High Court in Nairobi, Naivas described Mr Kagira as a stranger to the company with no legal claim to it.

No substantive reason

“There is no substantive reason or evidence for the applicant (Kagira) to seek an injunction order, protecting the company from losing its assets or shares. The court cannot ascertain any registered legal interest Kagira holds in the company. Mr Kagira has never been a legal or beneficial owner of the company's shares and cannot prevent the company from selling its shares or assets," Naivas said through its lawyers from Coulson Harney LLP.

According to Naivas, the High Court dismissed Mr Kagira's case in 2016, in which he claimed a 20 per cent shareholding in Naivas Ltd.

Naivas says an appeal by Mr Kagira is pending at the Court of Appeal, but he has unlawfully returned to the High Court in Milimani, Nairobi, to stop the company's operations.

Mr Kagira approached the court on April 3, 2023 to stop the company from selling its shares and assets.

Kagira claimed that he was the beneficial owner of Naivas Ltd, having contributed 20 per cent of the company's start-up capital when it was established in 1990.

In August 2021, Mr Kagira approached the Nakuru Court of Appeal under a certificate of urgency after his previous applications to claim ownership of the company were dismissed by the High Court.

The directors of Naivas Supermarket are listed as Mr David Kimani who owns 25 per cent, the late Simon Gashwe (25 per cent), Ms Linet Wairimu (15 per cent), Ms Grace Wambui (15 per cent) and the late Peter Mukuha Kago with 20 per cent.

According to Mr Kagira, on November 25, 2021, the Court of Appeal in Nakuru issued an order directing that the status quo of the disputed shares be maintained pending the determination of the appeal.

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However, he told the court that he had received credible information that the company, through its directors and shareholders, was in the process of selling its shares, including the disputed ones.

He added that he would potentially lose his initial investment and subsequent dividends from the disputed shares.

Mr Kagira is also seeking the revocation of the letters of administration issued to Gashwe.

He says Gashwe died before the completion of the distribution of shares in Standard Chartered Bank, cash in Barclays Bank (now Absa Bank), cash in Kenya Commercial Bank and a 20 per cent shareholding in Naivas Ltd, all of which were assets of her his father's estate.

Mr Kagira argues that Gashwe's death is sufficient grounds to revoke the grant of letters of administration.

The issuance of a fresh grant, he says, will facilitate the completion of the process of distributing shares in the estate to the respective beneficiaries.

In court papers, Mr Kagira had alleged that his father Kago called a family meeting in December 1989, which he allegedly attended alongside Kago, Kimani, Grace Wambui, Linet Wairimu, Robert Njau and Simon Gashwe (Mukuha's late father), where the family allegedly discussed and agreed to start a business.

Court documents

“Kimani contributed Sh10,000, Kago Sh30,000, Wambui Sh25,000, Kagira Sh20,000, and Wairimu gave Sh15,000, totalling Sh100,000,” say Mr Kagira’s court documents.

He added that the family agreed that each individual's contribution would form the basis of their shareholding in the company.

Mr Kagira argues that he attended the meeting, allegedly called by supermarket founder Peter Kago at his home in Cherangany, Kitale, where contributions were made to set up the company.

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However, he stated that the family members side-lined him and denounced him as a shareholder, even though he had contributed 20 per cent of the shares.

With 92 stores, Naivas is the largest supermarket chain in Kenya.

Naivas started as a shop in a small village in Rongai trading centre on the outskirts of Nakuru town.

The giant supermarket chain began as Rongai Self Service Stores, a family business. It is in Nakuru where it began as a small family shop before transforming into a retail giant.

Naivas founder Kago died in 2010, leaving his children, including David Kimani Mukuha (director) and the late Simon Gashwe Mukuha (chairman), as heirs to the business.

Late fathers' estate

Other siblings who own shares in Naivas include sisters Grace Wambui Mukuha and Linet Wairimu.

Gashwe was the administrator of their late fathers' estate.

The Mukuhas hail from Naivasha in Nakuru County.

The death of Kago exposed a rift in the family, which culminated in a court case over Naivas's succession.

The court case was triggered when Massmart, a South African subsidiary of retail giant Walmart, offered to buy a 51 per cent stake in Naivas for Sh3 billion in August 2013.

The family's eldest sibling, Mr Newton Kagira Mukuha, sued, asking the court to block the sale of a 50 per cent stake in Naivas to the South African retail chain.

Mr Kagira claimed that he was entitled to 20 per cent of the sale proceeds as part of his inheritance.

He also sought to be recognised as the heir to the multi-billion shilling supermarket chain, but lost on October 10, 2016.

The Nakuru High Court dismissed his challenge to a will written by his late father.

Justice Anthony Ndung'u found that Mr Kagira's objection to the will had no merit and ordered that Kago's assets be distributed in accordance with his will, written on March 20, 2010.

According to court records, Mr Kagira filed the case in 2013, claiming that his younger brothers had hijacked the family business and excluded him from the list of shareholders, despite him having contributed to the initial capital to set up the retail chain.

He claimed that his siblings were out to disinherit him, and opposed the will.

Instead, he produced a parallel will in court, claiming that his siblings were not genuine.

However, the court found that Mr Kagira had no interest in the retail chain, having run down all the other stores he inherited from his father.

The supermarket chain has recently been on an expansion driven by private equity (PE) investment, and aims to have 100 stores by the end of the year to cement its place as the largest supermarket chain in the region.

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