I&M Holdings Limited executive director Sarit Raja-Shah and his brother, Sachit Raja-Shah, Tuesday joined the list of billionaire executives who run Nairobi Securities Exchange-listed companies as the firm closed its first day of trading at the bourse.
I&M Holdings, which is the product of listed firm City Trust Limitedâ€™s recent acquisition of I&M Bank, opened trading at a price of Sh93 but later rose to close the day at Sh100, leaving the Shah brothers with a combined wealth of Sh2.69 billion.
The brothers, who are the sons of I&M Bank founder S.B.R Shah, have a combined stake of 6.88 per cent in the newly listed company, translating to 26.93 million shares.
Tuesdayâ€™s trading, which was also the price discovery day, valued the newly-listed company at Sh39.23 billion.
I&M Bank was valued at between Sh39.3 billion and Sh41.2 billion before the merger according to the offer document while City Trust Limited closed trading at the NSE in the run up to acquisition at Sh2.57 billion.
I&M Holdings, the new company has 700 shareholders, still short of the 1,000 required for listing in the marketâ€™s Main Investments segment.
The NSE has granted the company a six month exemption within which it must increase its shareholder base to the 1,000.
Biashara Securities Limited, which holds a 13.92 per cent stake in I&M Holdings, has approximately 1,000 individual shareholders and
subject to court and regulatory approvals will wind up to allow the investors to own shares directly in the new company, raising its shareholder base to 1,700.
â€œUpon completion of the transaction, the direct and indirect shareholding of Sarit S. Raja Shah and Sachit S. Raja Shah, will remain at 3.45 per cent and 3.43 per cent respectively,â€ the offer document said, ring-fencing the duo from any possible dilution of ownership.
Tuesdayâ€™s trading left Saritâ€™s stake at Sh1.35 billion while Sachit closed with a Sh1.33 billion stake in a move that effectively transformed a tightly-held family business founded by their father into a public company.
The listing also put the Shah siblings in the list of NSEâ€™s director billionaires that includes businessman Chris Kirubi (Centum Investment), Pradeep Paunrana (Athi River Mining), James Mwangi (Equity Bank), Jimnah Mbaru (Britam) and Scangroupâ€™s Bharat Thakrar.
Mr Mbaruâ€™s 279.3 million shares in Britam are currently worth Sh2.23 billion, Mr Mwangiâ€™s 3.45 per cent stake in Equity is worth Sh4.02 billion while Mr Thakrarâ€™s 18.19 per cent stake in Scangroup is worth Sh3.21 billion. Mr Kirubi owns 115.5 million shares in Centum Investment worth Sh2.51 billion.
Mr Sarit joined I&M Bank in 1993 as the executive director, having previously held a stint at Biashara Bank. He has a masterâ€™s degree in internal audit from City University London.
His brother Mr Sachit has previously worked as an equities analyst at HSBC Bank and at Citibank London.
â€œThe listing provides us with the platform to raise additional capital in the future to facilitate the achievement of our long term growth and expansion strategy and to improve on our capacities to successfully manage the growth we have achieved in the past few years,â€ said Sarit.
The merger and subsequent listing of I&M Holdings has left Ziyungi Limited as the largest shareholder with 18.74 per cent followed by Minard Holdings Limited with 17.27 per cent. Tecoma Limited is third with a 16.66 per cent stake.
The list of top shareholders includes Biashara Securities (13.92 per cent), DEG (6.25 per cent), Proparco (4.43 per cent), Prime Securities (3.65 per cent), Bhagwanji Raja Foundation (2.41 per cent), I&M ESOP Trust (0.35 per cent). The public has a 16.32 per cent stake.
Principal shareholders Minard Holdings Limited, Tecoma Limited, Ziyungi Limited, and Mnana Limited have agreed to lock in 50 per cent of their stakes for two years.
The four had a combined stake of about 60.52 per cent in City Trust and the 50 per cent lock in means 30.26 per cent of City Trust shares are locked-in, leaving a free float of 69.74 per cent, according to City Trust disclosures.
Unlike what the market regulator the CMA has done in the recent past, the Shah brothers, alongside two of Europeâ€™s largest development finance institutions – Proparco of France and DEG of Germany – which hold 10.7 per cent of I&M have been exempted from the lock-in rule. This means they can easily sell their shares and harvest their investment at any moment they deem fit.
The locked shareholders are barred from selling more than half their shares in the next two years.
I&M Holdings Limited has entered the market with 392,362,039 issued shares, having incorporated a 5:1 split of the 5.72 million City Trust Limited stock that was suspended from trading at Sh448 per share ahead of the transaction. I&M Bank also issued additional 363,722,034 new ordinary shares to its shareholders ahead of the acquisition.
Analysts had valued the share at between Sh95 and Sh111 ahead of the listing, based on the performance of I&M Bank in the past few years â€“ which was above the debut price of Sh93.
The transaction advisors Dyer and Blair Investment bank, gave the new share a fair value of between Sh101 and sh105, based on a valuation of the new company at approximately Sh40 billion.
But Standard Investment Bank however priced the company a little higher at Sh111.87, pegging it on forward price earnings for 2013 and price-to-book ratios that stood at 10.2 times and 2.0 times, respectively.
â€œThe bank has an impressive track record for growth on several parameters namely customer deposits, loans, net profit and in recent years, its regional growth trajectory. This performance places I&M Bank in a buy position with our market valuation at Sh95. We are looking at an upside of 18.75 per cent,â€ said ABC Capital general manager Samwel Kiraka.