UAP Old Mutual Tower, a 33-storey office complex in Upper Hill, Nairobi.
Billionaire businessman Joel Kibe has sued Old Mutual Holdings, seeking to be bought out at a price likely to top Sh1 billion by the insurer he accuses of trampling on the rights of minority investors to benefit its majority shareholder, Old Mutual East Africa Holdings.
In an application to the Nairobi High Court, 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, alternatively, an order be issued to liquidate the insurer 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 application seeks over Sh1 billion based on the 18 percent compounded over the 10-year investment. The businessman has had several investments in private and listed firms including at CMC Holdings where he was among investors who were bought out by Dubai’s Al-Futtaim Group.
Justice Josephine Wayua Wambua Mongare on Thursday, August 22, directed that the matter be mentioned on September 30, 2024, adding that the application be served and responded to within 14 days.
In the interim, the judge stopped the insurer from dealing in its assets, contracting new debt or transferring funds out of Kenya.
When reached for comment, Old Mutual Holdings’ chief executive Arthur Oginga told this publication that the company’s legal team will give a response next week.
Mr Kibe bought shares in UAP Holdings, which was renamed Old Mutual to adopt the brand of its ultimate parent company, Old Mutual Limited of South Africa, which acquired a 67 per cent stake in the Kenyan insurer.
The businessman, who also accused Old Mutual’s controlling shareholder of defrauding minority shareholders, told the court that he was misled by the insurer at a time when it was selling shares to the public.
Mr Kibe said that the insurer had said it was going to list its shares on the main investment market of the Nairobi Securities Exchange (NSE) which was to provide more liquidity to shareholders.
Instead, its top shareholders sold their holdings in multiple deals to Old Mutual and the listing plan has not progressed.
“In this petition, 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.
Mr Kibe said the insurer, which froze dividends since the financial year ended in December 2018, plans to issue 1.75 million preference shares to its parent firm to settle their multi-billion-shilling shareholder loans in a move he says will hurt small shareholders.
Preference shares take priority in the payment of dividends ahead of ordinary shares.
“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.
