A group of politically connected
businessmen has quietly exited the top shareholders’ list at CfC Stanbic
Holdings, the company that owns Kenya’s sixth largest bank CfC Stanbic.
The
latest regulatory filings show that the businessmen associated with
former presidents Daniel Moi and Mwai Kibaki have recently transferred
shares worth Sh4 billion that placed them among the top 10 owners in the
financial services company.
The shares were held
through Africa Liaison & Consultant Services (Alico) — an investment
vehicle that held 40.4 million shares or a 10.2 per cent stake in the
firm.
The disappearance of Alico from the list of CfC
Stanbic’s top 10 institutional owners signals that the old guard may
have finally liquidated their investment and bowed out.
Former
Attorney-General Charles Njonjo tops the list of Alico owners that also
includes Jeremiah Kiereini (former head of public service), Julius
Gecau (former Kenya Power CEO), and the late Asian businessman P.K.
Jani.
The late Ben Gethi, who served as Kenya’s police
chief, former Cabinet minister Bruce McKenzie, and spymaster in the Moi
government James Kanyotu also held large stakes in the company.
Alico
made it to the list of top CfC Stanbic Holdings owners in the wake of
the 2008 merger between CfC Bank and Stanbic Bank Kenya — a subsidiary
of South Africa’s Standard Bank.
The deal was concluded
after Standard Bank bought CfC Bank’s top owner Gambit Holdings (with a
49.6 per cent stake) in a multi-billion-shilling transaction.
Other shareholders, including Alico that held a 30 per cent stake in CfC Bank, were offered diluted stakes in the merged unit.
The
takeover included CfC Bank’s other business interests — CfC Life
Assurance Company Limited, the Heritage Insurance Company and CfC
Financial Services Limited — that were all combined to form CfC Stanbic
Holdings.
Standard Bank is the majority shareholder in
CfC Stanbic Holdings with a 60 per cent stake, giving it control over
the Nairobi Securities Exchange-listed firm.
Since the
merger was completed six years ago, CfC Stanbic’s units have grown
significantly, more than tripling profits and expanding the holding
company’s total assets by billions of shillings.
CfC
Stanbic Holdings’ net profit stood at Sh3 billion in the year ended
December 2012 compared to Sh846.5 million in 2008 — the first year of
merger.
The company’s asset base grew to Sh143.2
billion from Sh111.1 billion in the same period while the dividend
payout rose to Sh0.73 per share from Sh0.5 in 2008.
Alico’s
stake in CfC Stanbic Holdings is currently valued at Sh4 billion based
on the prevailing share price of Sh98.5, representing a 45.9 per cent
gain in the past six months.
The full extent of Alico
owners’ investment portfolio is not known because some of its founders
have invested in NSE-listed firms in their own names and through nominee
accounts.
“Alico’s footprint can be seen in companies
where its representatives hold directorships or stakes. It’s a wide
web,” said a source familiar with the company’s investment activities.
This
view is supported by chroniclers of Kenya’s capitalist history who have
explored the extent to which indigenous businessmen went to keep their
wealth under the radar.
“Chains of nominee accounts and
private companies were used to obfuscate ownerships, but it is clear
that their business interests were closely aligned and blossomed in this
period,” author Charles Hornsby wrote of Moi and Njonjo’s ventures in
the early 1970s in the book Kenya: A History Since Independence.
Alico’s
directors are also associated with property development firm Heri
Holdings, which has a full or partial interest in Nairobi’s College
House, Kolobot Gardens, and Norfolk Towers.
Besides,
Alico’s owners have vast business interests in their own right but it is
not clear whether these are linked to the powerful investment vehicle.
Mr
Kiereini holds 5.1 million shares or a 1.32 per cent stake in CfC
Stanbic Holdings through his personal investment vehicle Kingsway
Nominees.
The businessman also has significant stakes in other NSE-listed firms such as CMC Holdings (12.5 per cent), Unga Group (1.38 per cent), and East African Breweries (0.18 per cent).
Mr
Njonjo’s investment path closely mirrors that Mr Kiereini’s — the
former AG has had a 1.32 per cent stake in CMC through Feneast Nominees
account.
Mr Njonjo recruited Mr Kiereini and the late
P.K. Jani into Alico in the 1970s before the investment firm spread its
tentacles to banking, manufacturing, insurance, and motor dealership.
Mr Moi also took part ownership in these businesses through close aides following his ascent to the presidency in 1978.
The
late Kanyotu, Moi’s long-term spy chief held significant stakes in
multiple firms, including Firestone, Sheraton Holdings, and Sameer Investments — the flagship business of the tycoon Naushad Merali.
In
Kenya, Alico is seen as the clearest example of how the political elite
and top bureaucrats have over the years teamed up to build vast
business empires.
Most of the politically connected
business empires have their roots in the indigenisation policy that was
established in the 1970s and whose objective was to loosen European and
Asian businessmen’s grip on economic power.
The
Moi-era political and business elite included the then powerful Cabinet
minister Nicholas Biwott with whom they teamed in 1975 to form Lima
Limited, which specialised in importing farm machinery.
Mr
Biwott later joined hands with Israeli businessman Gad Zeevi to form
the HZ Group with interests in petroleum distribution, banking, hotels,
retail, and manufacturing.
Business interests
The
shift in policy is believed to have prompted Mr Mckenzie, a British
national with diverse business interests, to join Alico whose founders
wielded power in post-independence Kenya.
Alico made a
wave of acquisitions in corporate Kenya, buying significant stakes in
leading firms such as Barclays Bank and CMC Holdings which it later
exited.
Its shareholding in CfC Stancbic Holdings saw
its owners and nominees take up directorships in the merged entity which
they held until their exit in the past two years.
Mr
Njonjo and Mr Kiereini represented the interest of Alico on the
company’s board until their retirement in 2010 and 2012 respectively.
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