Baloobhai transfers Sh226m Sanlam stake in succession

Billionaire investor Baloobhai Patel has transferred his 21 percent stake in Sanlam Kenya currently valued at Sh226 million to his investment firm Aksaya as he implements his succession plan.

He previously held the shares directly. The transfer of the stake to Aksaya occurred late in the year ended December 2022, according to the insurer’s latest annual report.

Besides the asset transfer, Mr Patel’s firm also raised its stake in the Nairobi Securities Exchange-listed firm.

Aksaya held 30.24 million shares equivalent to a 21 percent stake in Sanlam as of December 2022. This was higher compared to December 2021 when Mr Patel held 30.16 million shares amounting to a 20.9 percent stake.

Sanlam narrowed its net loss to Sh54 million in the year ended December 2022 compared to a Sh542.3 million net loss recorded a year earlier, with the performance driven by reduced claims and lower operating expenses.

The insurer would have posted a profit were it not for the payment of deferred taxes which inflated its total obligations to the Kenya Revenue Authority by a large margin.

Sanlam paid taxes amounting to Sh381.8 million in the review period which surpassed its pre-tax profit of Sh327.7 million.

The transfer of Sanlam shares to Aksaya is part of the succession plan by Mr Patel, 85, who previously owned listed equities alone before introducing his wife Amarjeet Baloobhai Patel as a co-owner in 2015.

Their son Rohan Patel, who runs the family’s property investments, has taken a more active role in managing the listed equities portfolio that is valued at billions of shillings.

Besides Sanlam, Aksaya also inherited Mr Patel’s previous direct stake in Bamburi Cement last year.

The businessman transferred his 4.12 percent stake in the cement manufacturer currently worth Sh376 million in a transaction that occurred late last year when he announced that his stakes in listed firms including Carbacid Investments Plc will be migrated to the investment firm.

Aksaya took over the Bamburi stake in a year when it remained unchanged. The businessman had spent more than Sh300 million to buy an additional 7.9 million shares of Bamburi in 2021, more than doubling his holdings to 14.9 million shares equivalent to a 4.12 percent stake.

Bamburi’s net income in the year ended December 2022 declined 86.9 percent to Sh181 million on the back of reduced sales and increased costs.

The company’s net profit retreated from Sh1.38 billion posted in the previous year as sales dropped by six percent to Sh38.99 billion.

Besides consolidating Mr Patel’s stock market portfolio, the changes will also save him millions of shillings’ worth of taxes applicable on dividends in certain instances.

Read: Baloobhai buys Sh75m shares in Co-op Bank

Individuals resident in Kenya pay a withholding tax of five per cent on the dividends they receive.

Local firms are exempt from paying withholding tax if they own a stake of more than 12.5 per cent.