Billionaire investor Baloobhai Patel is set to restructure his multi-billion shilling portfolio of Nairobi Securities Exchange-listed shares, accelerating a succession process that started in 2015.
The businessman’s holding company Aksaya Investment Holdings Limited is set to take over key stakes that he has been owning directly as an individual and which he accumulated over decades.
Mr Patel, 84, introduced his wife Amarjeet Baloobhai Patel in 2015 as a co-owner of the stocks in multiple publicly-traded firms such as Sanlam Kenya, Bamburi Cement, Absa Bank Kenya and Co-op Bank.
Their son Rohan Baloobhai Patel, who runs the family’s property investment business, has taken a more active role in managing the listed equities portfolio.
Aksaya will start with the 49.9 per cent stake worth Sh1.5 billion in Carbacid Investments Plc in a private deal awaiting approval from the Capital Markets Authority.
“The transferors [Amarjeet and Baloobhai] are seeking to restructure key investments into a corporate structure to enable better succession planning and to enable the corporate entity to be better positioned as a strategic investor for future investments by Carbacid in the Kenyan and regional markets,” Aksaya said in a notice signed by Rohan.
Besides Carbacid, the family has a 20.9 per cent stake worth Sh268 million in Sanlam Kenya where Rohan replaced his father as a director in 2015.
Other significant investments are 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 available disclosures.
The family’s portfolio of NSE-listed stocks is valued at more than Sh3 billion.
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Placing the assets in an investment firm has the potential to cut costs and generate tax benefits.
Individuals resident in Kenya, for instance, pay a withholding tax of five per cent on the dividends they receive.
Local firms on the other hand are exempt from paying withholding tax if they own a stake of more than 12.5 per cent in the firm paying the dividend.
Such a tax exemption would apply to the Carbacid stake and the 20.9 per cent stake that the family holds in Sanlam Kenya should it also be transferred to Aksaya.
The family says it plans to remain a long-term shareholder in Carbacid through Aksaya.
“The transferors are also keen to ensure that Carbacid has a stable and strong principal shareholder,” Aksaya said in the notice.