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Thursday, 30 January 2014

Moi-era political elite exits top CfC Stanbic shareholders roll

By VICTOR JUMA, Source: Businessdailyafrica.com

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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