How to steal a Sh280 billion real estate company

Inside Kenya's biggest land grab in modern times

By Gitahi Ngunyi

On a cold evening in 2007, former Central Bank governor Nahashon Nyagah and business man Stephen Mwagiru were sitting at a Nairobi Hotel with a mixture of anxiety and excitement.

The African tea they were taking was hot enough to drive away the cold breeze of that night but not warm enough to calm the avalanche of thoughts that were running through their minds.

Bidco chief executive officer Vimal Shah, their business partner in their ground breaking real estate project had called earlier in the day setting up the meeting to share some good news.

Vimal finally arrived with excitement written all over his face. And there was a real good reason for his excitement.

Chopper ride

When he finally broke the news, Nyagah and Mwagiru also lightened up. Finally, their dream project was taking a concrete shape.

Vimal had just taken a chopper ride with Stephen Jennings, the fabled investment banker from New Zealand who singlehandedly built investment banking and private equity investments in Russia through his company Renaissance Capital.

The two had flown over the land in Ruiru which the business partners had planned to acquire to build a satellite city and Jennings had committed himself to investing in the project.

Shortly, after the meeting at the hotel, the three firmed up the agreement that would see the birth of Kenya’s first privately built smart city then that would have accommodated over 100,000 residents.

At the time of the agreement, the project was estimated to have been valued at sh280 billion once completion .

Fall out

Fast forward to 2018! The excitement over the project has been replaced by bewilderment and anger as the three initial Kenyan business partners in the Sh280 billion Tatu City project are now in a fierce fight to take back their company.  

The fight has the ingredients of a messy fall out boiling over to parliament, courts and graft investigation agencies.

Early this month, Kenya Revenue Authority (KRA) stopped sale of land belonging to Tatu City limited which is now controlled by Jennings. The KRA move followed tabling in parliaments of documents by Mwagiru alleging that Tatu City Limited which is now in Jennings hands had evaded paying taxes running into billions.

At the same time, Ethic and Anti-Corruption Commission has launched investigations into the operations of Tatu City following a petition filed by the three Kenyan shareholders.

So what went wrong?

Unknown to the three, Jennings did not just want a part of Tatu City project. The chopper ride had opened his eyes to the huge profit potential in the project and he had already thought out a scheme of kicking out the Kenyan trio from the project.

Debt trap

The first act by Jennings was to set up a debt trap for the investment vehicle which the three Kenyan shareholders were using in the acquisition of the land.

In 2007, the Kenya trio had set up Manhattan Coffee Investment Holdings in Mauritius to raise funds to finance the project. The offshore company owned all the shares in Waguthu Investment Holdings, the Kenyan registered firm which was to buy land in Ruiru from coffee plantation firm Socfinaf.

Waguthu Investments Holdings later rebranded to Tatu City Limited.

Under Vimal leadership, Manhattan Coffee had already started fundraising for a US$65 million facility. Negotiation for the facility from Barclays Capital and Standard Bank Group were at an advanced level.

The three initial investors were to use their shareholding in the company as security for the loan from the two lenders.

Entry fee

Like all crafty investment bankers, Jennings fashioned his entry into the project like a sweet heart deal. In the entry agreement between Renaissance Capital and Manhattan Coffee which we have seen, Jennings offered to pay Mwagiru and Nyagah a handsome entry fee of Sh100 million as a thank you gift for allowing him into the project.

Then he offered to offload the fundraising burden from Manhattan Coffee allowing Vimal who was leading the fundraising effort to concentrate on his job as Bidco CEO.

It was a deal, the three Kenyan shareholders, or any other Kenyan business person would not turn down. And the pen was put on paper almost immediately.

But that initial deal was a test by Jennings on whether the Kenyan shareholders could see through his debt trap plot. In order to allow Jennings to join the project, the three Kenyan shareholders through Manhattan Coffee agreed to form a new special purpose vehicle (SPV) with Renaissance Capital giving birth to Cedar IV. It is Cedar IV that would be the owner of Tatu City once the deal sailed through.

Interest free loan

It is through subscription of shareholding in Cedar IV that Jennings executed the debt trap test run. Investing in Cedar IV through a Cyprus registered subsidiary of Renaissance Capital, SCF Holdings II, Jennings convinced the Kenyan shareholders to accept an interest free loan from his firm.

The loan facility of US$10.8 million was to go to Cedar IV which would then lend it to SCF II to buy shareholding in the same company (Cedar IV).

In other words, Jennings was lending money to Cedar IV so that Cedar IV could lend the same funds back to him to buy shareholding in Cedar IV.

The scheme worked out perfectly. The Kenyan shareholders did not read through the debt trap test run and the deal was signed leading to the acquisition of the first land parcel of 1000 acres previously known as Tatu Estate from Socfinaf Company Ltd.

With the test of the scheme going undetected, it was now time to execute the bigger scheme.

According to agreement with Socfinaf, the original owners of the land where Tatu city project sits, the Kenyan shareholders had the option of buying the entire shareholding of the coffee plantation firm after buying Tatu Estate land.

But Manhattan Coffee needed financing to acquire Socfinaf’s other parcels of land, coffee factories and other assets. For Jennings, the option financing provided the biggest opportunity to tie down the Kenyan shareholders with debt having agreed to allow him to take over the entire fundraising task.

Bigger say

However, the scheme would not succeed in a situation where the shareholding was 50-50 between him and the Kenyan shareholders.

It was easy for Jenning to convince the Kenyans shareholders of the need for more shareholders and a bigger stake for himself because the amount required for the purchase of Socfinaf company limited was huge at US$65 million (Sh6.5 billion at the current exchange rates).

After convincing the Kenyans on the need for a new shareholding structure that would give him a bigger say and an extra shareholder in the project, a new special purpose vehicle (SPV), CedarSoc was mooted and registered in Mauritius for the purpose of acquiring Socfinaf.

In CedarSoc, Jennings interests were registered under two companies; SCF II and Renaissance Capital Partners. A hedge fund, GLG Atlas & Value Recovery Fund was also given a stake while the three Kenyan shareholders’ interests were represented by Manhattan Coffee.

It is in the operations of CedarSoc that Jennings true colours as a cunning investment banker came out. To fund the acquisition of Socfinaf, Jennings convinced the Kenyans that Renaissance was a big investment bank which could easily finance the acquisition.

In the boardroom, Jennings offered to fund the project with a facility that would be charged interest at market rates. CedarSoc was also to pay Renaissance Capital an arrangement fee of US$2 million (Sh200 million) for the fundraising effort.

In 2008 when the financing deal was signed between CedarSoc and Renaissance, the interest rate for the loan was 3 percent per year.

With the assurance of financing at an affordable rate, the Kenyans relaxed and left the running of the project to Jennings and his appointees. Only Nyaga was actively involved as Tatu City Limited board chairman while Mwagiru and Vimal were comfortable attending occasional board meetings.

Things were to start changing shortly afterwards when the interest on the loan started heading skywards without notice.

To pay back the US$65 million, Tatu City limited was to start selling plots in the project and remit the money to CedarSoc in Mauritius which would then make loan repayments to Renaissance Capital.


On acquisition, Socfinaf was rebranded to Kofinaf.

The loan from Renaissance was secured by the shareholders shares in CedarSoc while CedarSoc loan to Tatu City Limited was secured by the project’s land titles.

According to the documents we have seen, interest rates rose from 3 per cent to 33 percent per annum and further to 50 percent. Abruptly, what had begun as a godsend financing deal started to haunt the local shareholders.

By the time the Kenyan trio was realizing the project was slipping through their fingers, Jennings had sold a big chunk of the land in the project and repatriated the income to his foreign accounts.

To date, Tatu City Limited and Kofinaf have sold land worth US$140 million (Sh14 billion) but they are yet to finalise repaying the loan and accrued interest to Renaissance Capital.   

A ruthless businessman, Jennings would not tolerate the trio’s protests over how he was running the project.

When Mwagiru started protesting through court cases, Jennings immediately started a loan recovery process by taking over shares of the three Kenyan which effectively diluted their shareholding in the company.  

With the Kenyan shareholding in CedarSoc and Tatu City thoroughly diluted, Jennings escalated the fight, kicking the Kenyans out of the board starting with the firing of Nyaga as Tatu City secretary.

The company was now in the firm control of Jennings and his appointees.   


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