Deep-pocketed Bamburi Cement investors, including businessman Baloobhai Patel, pocketed more than Sh12.7 billion in capital gains and special dividends in the latter months of 2024 after the successful sale of the company to a Tanzanian tycoon and the earlier divestiture of its Ugandan subsidiary.
The investors enjoyed a Sh20 per share premium on the company's last trading price before the July 10 buyout disclosure by Tanzanian company Amsons Group.
They also bagged a special dividend of Sh18.25 per share in September, arising from the proceeds of Bamburi's Sh10.8 billion sale of its 70 percent stake in Uganda's Hima Cement.
Bamburi was trading at Sh45 ahead of the Amsons bid, executed for Sh65 per share and concluded towards the end of last month.
Mr Patel, who invested in Bamburi through his holding company Aksaya Investment Holdings Limited, emerged as one of the big winners in the takeover deal, having more than doubled his stake in Bamburi during the year.
The businessman, who was the third biggest shareholder in Bamburi behind Swiss firm Holcim and an unnamed nominee account investor, raised his stake from 14.96 million shares (4.1 percent of the company) in December 2023 to 40.36 million shares (11.1 percent) by mid-October.
This means that Amsons paid him Sh2.62 billion for his shares, giving him a gain of Sh1.25 billion on the value of his stake in the company as of June 30, when he held 30.5 million shares.
He also banked Sh736.6 million from the special dividend, which was paid on September 27 to shareholders on the register on September 20. This brought his total short-term profit to Sh1.98 billion.
Holcim earned Sh13.8 billion from selling its 212.7 million shares to Amsons, in addition to the Sh3.88 billion it received from the special dividend issuance.
Standard Investment Bank's Mansa X Fund, which acquired 4.02 million Bamburi shares after the Amsons bid was announced, was in line for a payout of Sh261.6 million from the Tanzanian firm, and a dividend of Sh73.5 million.
Underwriter APA Insurance also acquired 1.06 million shares before the close of the offer period, which meant a payout of Sh68.9 million from Amsons.
However, the capital gains enjoyed by APA and Mansa X were likely to be limited, given that they bought into the company after its share price had adjusted upwards in reaction to the premium offered in the buyout offer.
Bamburi's market price rose sharply to Sh57.75 in reaction to the July 10 takeover announcement—and later touched a high of Sh81 in September due to the emergence of a competing offer of Sh76.55 a share by Kenyan firm Savannah Clinker.
Savannah would withdraw its bid just before the offer expired on December 5, days after its chairman Benson Ndeta was arrested and later released over alleged fraud.
He accused the Capital Markets Authority (CMA) and unnamed detractors from the government of contributing to his exit from the Bamburi bid, saying that the arrest had caused his financial backer —US-based infrastructure financier Global Infrastructure Finance & Development Authority (Gifda)— to seek additional due diligence on Savannah.
The CMA declined a request to extend the offer period by 60 days to accommodate the Gifda request.
High-net-worth and institutional shareholders, however, avoided the temptation of cashing out at the elevated market price after Mr Ndeta's counteroffer, even after booking the special dividends.
Other than Aksaya, which added to its stake, and the entry by Mansa X and APA, the rest of Bamburi's top 10 shareholding list remained largely unchanged.
The top owners' list contained several faceless investors sitting behind nominee accounts, including the second largest investor whose holdings of 15.68 percent or 59.6 million shares were in the custody of Standard Chartered Bank.
These shares earned the investor Sh3.7 billion in the buyout, and a further Sh1.04 billion from the Hima special dividend.
Four other nominee accounts at Standard Chartered and Kestrel Capital held 17.1 million shares, which netted the owners Sh1.11 billion from Amsons.
