Tanzanian billionaires Aunali and Sajjad Rajabali have bought an additional 46.6 million shares in KenolKobil, becoming the fourth largest investors in the oil marketer with a stake valued at Sh1.5 billion.
The duo first acquired 30.2 million shares in the Nairobi Securities Exchange-listed firm in 2016 and bought the extra stock last year, according to KenolKobil’s latest annual report for the year ended December.
The new shares, valued at about Sh900 million, have raised their stake to 5.22 per cent. Their increased investment coincided with a heavy trading of shares among other KenolKobil’s top owners, with institutional investors such as Wells Petroleum and Energy Resources buying or selling tens of millions of shares.
Energy Resources, which previously held 88.1 million shares, for instance, has disappeared from the list of the top 10 shareholders as of December 2017.
The oil marketer’s chief executive, David Ohana, also has an option to take up 88 million shares at a grant price of Sh10.3 per share starting January 1, 2020, and ending on January 1, 2023.
The shares have a current market value of Sh1.7 billion. Assuming Mr Ohana takes up all the shares, remains invested and no other additional stock is issued, he could end up with a stake of about five percent in the company at the end of the six years.
The Rajabalis’ new investment in the oil marketer signals their confidence about the firm’s future prospects. KenolKobil reported a net profit of Sh2.46 billion in the year ended December, a two percent rise from Sh2.41 billion the year before.
Its market capitalisation has more than doubled in two years to Sh28.6 billion, ranking second only to KenGen in the energy and petroleum segment after overtaking Kenya Power. The company has spent billions of shillings to clean up its books from legacy problems including claims from past management and receivables from business partners.
It paid its former chief executive Jacob Segman Sh707.1 million in December to settle a long-running dispute over his stock-based compensation.
The company has also provided more than Sh1 billion over the past two years alone to write off receivables from Kenya Petroleum Refineries Limited (KPRL), which delivered less volume of petroleum products to the oil marketer than earlier projected.
KenolKobil says it has settled all its business disputes. “We expect no further provisions or expenses related to these matters,” the company said in a statement.
The liabilities, whose settlement has eaten into KenolKobil’s profits in recent years, may have contributed to Puma Energy’s cancellation of its takeover bid for the oil marketer in 2013.
Besides cleaning its books, the oil marketer has sharpened its focus on profitability, exiting Tanzania and Democratic Republic of Congo markets in 2016.
The move by the Rajabalis to buy more KenolKobil shares has further expanded their interests in NSE-listed firms, with the investors holding significant stakes in firms including Co-op Bank and I&M Holdings.
They are also major investors in their home market with interests in firms like CRDB Bank Plc.