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Kenyatta family acquires another bank at Sh1.4B



Commercial Bank of Africa (CBA) has made a Sh1.4 billion cash offer to buy out Jamii Bora Bank, expanding the Kenyatta family’s business empire which transcends banking, dairy, real estate, hospitality and manufacturing sectors.

The Jamii Bora acquisition bid comes only weeks after CBA announced a reverse takeover of NIC Group, which is listed on the Nairobi Securities Exchange (NSE).

The combined CBA, NIC and Jamii Bora business will rank as Kenya’s third-largest banking entity after KCB and Equity.

The three will have total assets of about Sh457 billion, rivalling KCB and Equity, which have assets of Sh684.1 billion and Sh560.3 billion respectively.

CBA is majority-owned by the wider Kenyatta family, whose members include President Uhuru Kenyatta.

People familiar with the underway transaction say CBA will hold Jamii Bora privately and also own a stake in the merged operations of CBA and NIC whose shares will be listed on the NSE.

CBA’s microcredit business, M-Shwari, is to be spun off to Jamii Bora while CBA/NIC will focus on their mainstay corporate and SME banking.

“Due diligence and negotiations have been ongoing since last year and the deal is likely to close in a matter of weeks,” said a source who is involved in the deal but requested anonymity to speak candidly.

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The Jamii Bora chief executive, Sam Kimani, announced his resignation from the lender on Wednesday and was succeeded by his deputy, Tim Kabiru, in an acting capacity.


Steep discount

At Sh1.4 billion, the buyout offer is a steep discount of nearly 60 per cent to Jamii Bora’s last published book value of Sh3.4 billion in March.

The lender has not released its half-year and third-quarter financials, having received an exemption from the Central Bank of Kenya (CBK) to facilitate the ongoing buyout.

Jamii Bora’s shareholders could get more cash in addition to the purchase price, conditional on CBA establishing that the lender is on a firm financial footing post-transaction.

“Beyond the Sh1.4 billion, there is a further consideration based on the bank’s future performance,” the source said.

The additional payout, if it materialises, will narrow the current gap between the bank’s net assets and the initial compensation.

Among the shareholders to be bought out are the ex-CEO, Mr Kimani, and his successor, Mr Kabiru, who will get an estimated combined payout of Sh238 million through their investment vehicle, Asterisk Holdings, which has a 17 per cent stake in the lender.

The duo invested in Jamii Bora and took executive positions in the bank in 2011 following their departure from KCB Group, which implemented a major restructuring of its executive team at the time.

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Private equity firm Catalyst Principal Partners will get Sh224 million for its 16 per cent equity while Shorecap Limited will receive Sh238 million on its 17 per cent equity.

Jamii Bora Scandinavia will be paid Sh224 million for its 16 per cent stake. The bank also has hundreds of individual investors.

It was not immediately clear how many of these investors will break even at the initial Sh1.4 billion aggregate buyout price.

Additional capital

CBA was able to make an offer below book value because it expects to inject additional capital into Jamii Bora which, for instance, has suffered liquidity shortfalls.

The lender’s liquidity ratio stood at negative 11.1 per cent in March, far short of the minimum statutory requirement of 20 per cent. This means that its ability to meet short-term obligations is significantly limited.

The entry of the deep-pocketed CBA is expected to change the fortunes of Jamii Bora, which has conducted several rounds of capital-raising in recent years to grow in the competitive SME lending segment.

Implementation of interest rate controls has hurt most of the medium and small banks such as Jamii Bora, which relied on wholesale deposits to lend to individuals and SMEs at rates relatively higher than the current maximum of 13 per cent.

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Jamii Bora narrowed its net losses to Sh51.2 million in the first quarter ended March compared to Sh96.2 million a year earlier as interest income plunged 36 per cent to Sh264.9 million.

Its loan book declined 15.3 per cent to Sh7.9 billion.

The transactions initiated by CBA mark a flurry of deal-making in the banking sector where institutions have lost the large premiums of up to three times the book value they commanded prior to the interest rate caps, encouraging opportunistic buyers to step in with rescue and growth capital injections.

Private equity firms AfricInvest and Catalyst Principal Partners, for instance, last month acquired a 24.2 per cent stake in Prime Bank for $50 million (Sh5.1 billion) at book value.


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Toyota recalls 3.4 million vehicles worldwide over airbag glitch




Over three million Toyota vehicles have been recalled over malfunctioned airbags.

The electronic error in the manufacture has been experienced in their cars around the world. Some of the airbags failed to launch at impact during accidents.

The recall had affected around 2.9 million vehicles in the US between 2011-2019 Corolla makes, 2011-2013 Matrix, 2012-2018 Avalon and 2013-2018 Avalon Hybrid vehicles.

The malfunction is in the electronic control unit that doesn’t provide sufficient guard against the electrical noises that are experienced during the accidents, which are causing the incomplete release of the airbags. 

The car dealers will have to add a noise filter between the airbag control module and its wire harness where necessary.

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It’s brother versus brother in Sh20 billion city estate fight



They are among the most elegant residential estates in the country, with residents expected to enjoy the serene environment presented by the beautiful trees surrounding them.

But, for a few months, homeowners in two city estates have not known peace as they fight with their developers over unfulfilled promises such as a gym, swimming pool and other amenities.

What was thought to be a done deal has now spilt to the corridors of justice as owners demand what they were promised on buying their homes.

One of the estates is Kihingo Village, also known as Waridi Gardens in Kitisiru, Nairobi, while the other is Oryx Villas in Lavington.

One pits a brother against his younger sibling supported by homeowners, while the other features eight buyers, among them a sitting MP, a judge and the property developer.

While obtaining an order blocking the development of an empty plot in Lavington, Senior Counsel Paul Muite told Justice Elijah Obaga last year they were apprehensive that they might wake up one day to find a septic tank built on the disputed plot gone.

He said the tank and soak pit for the nine maisonettes in the compound is erected on a disputed plot, with both properties accessed through a common gate.

According to Mr Muite, when his clients purchased the maisonettes known as Oryx Villas, they were promised that a piece of land adjacent to the homes would be amalgamated into one.

He further said the deal would have seen the developer build a gym, swimming pool, gardens, driveways and other amenities on the empty plot. Buyers were also entitled to apply for membership and ownership of one share of Muthangari Gardens.

It is this claim that they have kept reminding the developer to comply with as agreed.

All was well until September 24 last year when they were served with an order from the county government stating that they had illegally blocked an access road to the second plot.

The director of planning, compliance and enforcement at City Hall issued an order allowing Guangzhou Villas, a new developer, to remove a gate and wall blocking an access road to the plot within 48 hours.

The county government is supporting the developer and wants an order blocking the planned construction lifted.

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In a response filed in court, Ms Beatrice Kimathi, the planning compliance and enforcement officer in charge of Dagoretti North, wants the order obtained by the homeowners lifted, stating that it was perpetuating an injustice.

But buyers, led by Angela Musimba, Justice Joel Ngugi, Jane Sigilai and others stated that they were facing the danger of being deprived of their means of sewage disposal if Guangzhou Villas Ltd is allowed to proceed with the planned construction.

The entry of Guangzhou into the dispute, they say, is a sham and intended to defeat the course of justice. This was because Ms Patricia Mwihaki, a major shareholder in the company and the wife of Fred Rabongo, is also a director and shareholder of three other companies involved in the dispute.

Mr Muite said the incorporation of Guangzhou Villas was for the sole reason of defrauding them of the property.

Guangzhou Villas, which wants to develop the disputed plot, told Justice Obaga that they were suffering losses with the order stopping the development still in force.

Through lawyer Mwenda Royford, the company told the court that the order should be vacated because it was issued based on an agreement that they were not privy to. He also said Guangzhou has been sued wrongly.

The homeowners, including Musimba, Stephen Githinji, Charles Njuguna, Evans Sigilai and Janet, Justice Ngugi, Sylvia Kang’ara and John Wachira, obtained orders stopping Guangzhou from accessing and developing the plot.

They have sued Mr Rabongo and his wife Mary, Daniel Ogola, Impulse Holdings, Muthangari Gardens Management Ltd and Dayax Investments Ltd.

It is their contention that none of the defendants has given them copies, despite requests, of the intended developments, on the nature of the developments and there has been no consultation regarding the same issue.

“It is, therefore, amply clear that Impulse Holdings fraudulently held itself out as the registered owner of the subservient property, when it well knew that the said property was not registered in its name,” stated Ms Sigilai in an affidavit.

Guangzhou, on its part, said it is the rightful owner of the plot, pursuant to a transfer registered on May 7, 2019.

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In an affidavit sworn by Patricia Mwangi, a director of Guangzhou, she said Impulse Holdings or Oryx Villas have never owned the second plot.

“The plaintiffs are neither the registered owners of the property registered under Guangzhou Villas nor do they have any beneficial interest in it. The applicant is a stranger to the plaintiffs’ allegations on purported amalgamation of two parcels of land,” she said.

According to Guangzhou, the only common interest is the access road and the shared boundary.

In Kitisiru, Nairobi, Kenyans have been treated to theatrical scenes as two brothers battle for control of an estate estimated to be worth Sh20 billion and known as Kihingo Village (Waridi Gardens) Ltd.

The upmarket estate has 55 palatial houses and the two siblings are battling for control of the multi-billion-shilling property inherited from their father, the late Joseph Augustine Gethenji.

The dispute stems from the control of a Sh4 billion club house, which offers various recreational services to homeowners, including a swimming pool, steam bath and jacuzzi.

The club house, popularly known as Bustani building, is managed by the developer of the estate of Kihingo Village (Waridi Gardens) Ltd-KVWGL.

Homeowners are the only ones who enjoy the facilities at a certain rate.

KVWGL is managed by Kihingo Village (Waridi Gardens) Management One Ltd (KVWGMOL), whose shareholders and directors are Fredrick Gitahi Gethenji, former Tetu MP James Ndung’u Gethenji and Chacha Mabanga.

Through a Memorandum and Articles of Association, KVWGMOL is the controlling shareholder of KVWGL, with a total of 117 shares.

The manager or developer of the estate has two subscribing shares, leaving 115 shares and KVWGMOL, popularly known as Management One, with 60 shares while the house owners have 55 shares.

The brothers have disclosed to the High Court in their various cases that during the voting to pass resolutions on how the managing company will carry out its affairs, the controlling shareholder board of directors appoints a proxy, who votes on its behalf. This has 62 shares and, therefore, has the swing vote.

According to court documents and those filed at the Company Registry in the Attorney-General’s Office, Mr Gitahi resigned on September 20, 2011 and ,after 19 months, he was replaced by Mr Mabanga as a director in Management One Ltd with effect from March 13, 2013.

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In his resignation letter, Mr Gitahi alleged: “Despite several warnings by legal counsel of the illegality of the company structure it continues to be run by only two directors instead of seven as stipulated in law. I cannot and will not be held liable against any legal action.”

The board of directors of KVWGL are Mr Ndung’u, Mr Gitahi, Naresh Mehta, Eric Govani, Mr Mabanga, Amee Chalishazar, Sheetal Khanna and Muhib Noorani.

After his resignation, Mr Gitahi lost the powers to manage the company and the firm is now being overseen by Mr Ndung’u, who is also the chairman of KVWGL.

Because of the constant wrangling police have, on two occasions, picked up Mr Ndung’u and once charged him in court.

In a bid to wrestle control of the multi-billion-shilling estate from Mr Ndung’u, some homeowners held a special general meeting on April 13 last year, where changes were made in the management by removing Mr Ndung’u.

Judges Loise Komingoi, Margaret Muigai and Wilfrida Okwany have given orders to maintain the status quo, keeping Mr Ndung’u at the helm of the estate.

But homeowners, through Kifaru Investment Ltd (KIL), Wanjiru Shinga, Kishorkumar Dhanji Varsani, Harji Dhanji Varsani, Samuel Wambu Mwangi, Mohan Singh Panesar and William Pike, are opposed to the move, claiming that the court should allow them to appoint a reputable agent to manage the estate.

Among the orders they seek is one compelling KVWGL and KVWGMOL to immediately restore utilities and services to all residents of the estate at their expense.

The seven are also seeking to compel the Registrar of Companies to effect changes in the company register and records in accordance with the award of July 28, 2016 and the decree dated February 15, 2019 by removing all reference to Class B shares (the 60 controlling shares held by KVWGMOL in KVWGL).

They are also seeking to remove all purported Class B shareholders (Ndung’u, Gitahi and Mabanga).

The estate sits on 37 acres with self-contained houses, each standing on half an acre, but despite all this, peace still eludes residents.


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