Joel Kibe sues Old Mutual seeking over Sh1 billion buyout

Billionaire businessman Joel Kibe has initiated legal action against Old Mutual Holdings, demanding a buyout that could exceed Sh1 billion.

Kibe accuses Old Mutual of neglecting the rights of minority shareholders in favour of its majority stakeholder, Old Mutual East Africa Holdings.

In his petition to the High Court in Nairobi, Kibe alleges that Old Mutual has breached its promise to list on the Nairobi Securities Exchange and has secured large loans from its parent company under unclear terms.

He argues that converting some of these loans into shares will further dilute the investments of smaller shareholders, who have already seen minimal returns.

As the sixth-largest shareholder, Kibe acquired 1.54 million shares in Old Mutual for Sh290.9 million between July 15, 2014, and June 29, 2015.

He now requests the court to mandate the company to buy back his shares at a premium or consider winding up the insurer.

“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 per cent per annum from the date of purchase,” Kibe pleads with the court.

His lawsuit is pursuing over Sh1 billion, which includes compounded interest over the decade-long investment. In addition to his stake in Old Mutual, Kibe has investments in other private and publicly traded companies, such as CMC Holdings, where he was bought out by Dubai’s Al-Futtaim Group.

On Thursday, Magistrate Josephine Wayua Wambua Mongare set a mention of the case for September 30, 2024, and instructed that the application be served and responded to within 14 days.

Until then, the court has barred Old Mutual from trading its assets, incurring new debts, or transferring funds out of Kenya.

Kibe’s shares were originally purchased in UAP Holdings, which rebranded as Old Mutual after being acquired by Old Mutual Limited, which holds a 67 per cent stake in the firm.

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He claims that Old Mutual misled investors about the company’s plans to list its shares on the Nairobi Securities Exchange, which was supposed to enhance liquidity for shareholders.

However, the planned listing never materialized, as major shareholders sold their shares back to Old Mutual in multiple transactions.

“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,” Kibe told the court.

Court documents reveal that Kibe received Sh7.23 million in dividends from Old Mutual in 2015, 2017, and 2018. However, since the end of 2018, dividends have been frozen.

He argues that Old Mutual’s plan to issue 1.75 million preference shares to its parent company to address substantial shareholder loans will disadvantage smaller shareholders, as preference shares take priority over ordinary shares in dividend payments.

On Monday, Old Mutual Group acknowledged the ongoing legal proceedings, saying that they only affect the Old Mutual Holdings and not the other entities in its stable.

“These legal proceedings are solely related to Old Mutual Holdings Plc. Other entities with the Old Mutual Group, including Old Mutual Life Assurance Kenya Limited, Old Mutual General Insurance Kenya, and Old Mutual Investment Group, are not affected and will continue to operate as normal,” the company said in a notice.

Old Mutual further pledged to cooperate fully with the legal process.