Baloobhai successively restructures fortunes in the stock market

Baloobahi Patel. PHOTO | ALICE OTIENO | NMG

Billionaire investor Baloobhai Patel is about to restructure its multi-billion shilling portfolio of shares listed on the Nairobi Securities Exchange, accelerating a succession process that began in 2015.

The businessman’s holding company, Aksaya Investment Holdings Limited, is about to take over the major interests that he owns directly as an individual and which he has accumulated over decades.

Mr. Patel, 84, introduced his wife Amarjeet Baloobhai Patel in 2015 as co-owner of the shares in multiple listed companies such as Sanlam Kenya, Bamburi Cement, Absa Bank Kenya and Co-op Bank.

READ: Baloobhai buys Sh75m shares in Co-op Bank

Their son Rohan Baloobhai Patel, who runs the family’s real estate investment business, has taken a more active role in managing the listed equity portfolio.

Aksaya will begin holding the Sh1.5 billion 49.9 percent stake in Carbacid Investments Plc in a private deal pending approval by the Capital Markets Authority.

The transferors [Amarjeet and Baloobhai] are seeking to restructure key investments in a corporate structure to enable better succession planning and to better position the corporate entity as a strategic investor for future investments by Carbacid in the Kenyan and regional markets, Aksaya said in a notice signed by Rohan.

In addition to Carbacid, the family owns a 20.9 percent stake worth Sh268 million in Sanlam Kenya, where Rohan replaced his father as director in 2015.

Other significant investments include minority stakes in Absa Bank Kenya (with a current market value of Sh510 million), Bamburi Cement (Sh468 million) and Co-op Bank (Sh489 million) based on the latest disclosures available.

The family portfolio of NSE-listed stocks is valued at over Sh3 billion.

READ ALSO: Baloobhai buys Sh293m Bamburi Cement shares

Placing the assets in an investment firm has the potential to save costs and generate tax benefits.

For example, individuals living in Kenya pay a five percent withholding tax on the dividends they receive.

Local companies, on the other hand, are exempt from paying withholding tax if they have an interest of more than 12.5 percent in the company paying the dividend.

Such a tax exemption would apply to Carbacid’s interest and the family’s 20.9 percent interest in Sanlam Kenya, should these also be transferred to Aksaya.

The family says it intends to remain a long-term shareholder in Carbacid through Aksaya.

The transferors also want to ensure that Carbacid has a stable and strong majority shareholder, Aksaya said in the notice.

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