Kenya

Court bars Naivas sale as brothers squabble

Court bars Naivas sale as brothers squabble

A Naivas Supermarket outlet on Muindi Mbingu Street in Nairobi on October 10, 2021.

Photo credit: Lucy Wanjiru | Nation Media Group

A sibling rivalry over the control of retail chain Naivas has intensified after one of the sons of its founding owner obtained a court order barring his brothers from selling more stakes in the company.

The Court of Appeal allowed an application by Mr Newton Kagira Mukuha to stop his siblings from selling additional shares until his appeal is heard and determined.

“The status quo in so far as the shares in dispute are concerned be maintained pending hearing and determination of the said appeal,” Judges Hannah Okwengu, Asike Handa, and Daniel Musinga said in an order dated November 25.

Mr Kagira is the eldest son of Naivas supermarket founder, Peter Mukuha Kago, who passed away in 2010.

He moved to the Court of Appeal in Nakuru in August this year under a certificate of urgency after his previous applications to claim ownership of the business were dismissed by the High Court.

Mr Kagira accuses his family members, specifically his brother David Kimani, the Managing director of Naivas Supermarket, of locking him out of the retail business and disinheriting him yet he contributed a 20 percent starting capital in 1990.

In his latest application in court, he argues that he has been locked out of the family benefits after his siblings allocated all shares to themselves and went ahead to sell part of the business for Sh6 billion.

Ownership structure

Naivas Supermarket directors are David Kimani who owns 25 percent stake, the late Simon Gashwe who served as the company chairman (25 percent stake), Linet Wairimu (15 percent stake), Grace Wambui (15 percent stake) and their late father Peter Mukuha Kago who owned 20 percent of shares.

Mr Kagira argues in court that the true ownership structure of Naivas Supermarket should read 30 percent shares stake by their late father, his sister Wambui (25 percent), Wairimu (15 percent), Kimani (10 percent) and 20 percent shareholding for himself.

Mr Gashwe died at a Nairobi hospital in August 2019 while undergoing treatment.

Mr Kagira claimed that Mr Kimani redistributed part of his father’s stake to family members without allocating anything to him.

"That the applicant is praying that the honorable court be pleased to issue temporary order restraining the respondent and all directors of Naivas Limited from further sale of shares or interfering with money assets held by Naivas Limited pending the hearing and determination of Aappeal,’’ reads part of the application that he filed in court.

“That the applicant herein has been denied any company benefits from Naivas Limited for a period of more than 30 years despite having been a true contributor of 20 percent, the 3rd largest contributor of the seed capital,’’ further reads the application.

Family wrangles

Mr Kagira further challenges the shareholding of his brother Kimani, whom he alleges had illegally allocated himself a 20 percent shareholding in the retailer.

Contacted for comment on the court’s decision, Mr Kimani, through the retailer's chief commercial officer Willy Kimani, said they are aware of the new directives but would not wish to comment.

''We are aware of it but we would not wish to discuss the issue for now,'' Mr Kimani told the Nation.

The new development comes less than two years after the supermarket chain raised Sh6 billion after selling a minority stake of 30 percent to a consortium of investors among them the International Finance Corporation (IFC), the private lending arm of the World Bank. IFC, private equity firms Amethis and MCB Equity Fund, and German sovereign wealth fund DEG teamed up to acquire the minority stake.

In separate disclosures, however, IFC said it invested $15 million (Sh1.68 billion) while DEG said it provided $10 million (Sh1.1 billion).

Amethis and MCB Equity Fund are yet to reveal the size of their participation in the deal.

The death of Mr Kago in 2010 opened the lid on the wrangles on the family-owned business pitting Mr Kimani’s camp against their brother Kagira who moved to court to claim part of the ownership of the retail giant.

The feud saw South African retail giant Massmart exit from buying the majority stake from Naivas after Mr Kagira moved to court to protest the sale.

Mr Kagira has since opened his retail business named Green Mart supermarket.