How Centum director earned Sh200 million from Platcorp deal

Imtiaz Khan wiggled into the share acquisition deal through investment firm

Centum CEO James Mworia
Centum CEO James Mworia

When listed investment firm, Centum publishes its annual report for 2017/2018, one name will be missing from the list of directors.

That name is Imtiaz Khan. This is not a name that will draw public attention in normal circumstances.  

But for those familiar with Centum acquisition and disposal of stakes in private companies, this name stands out like a sore thumb.

One of Centum investment deals that has Khan’s finger prints all over it was the acquisition of the 45 percent stake in loan shark firm Platcorp Holdings Limited.

Platcorp is the holding company that owns Platinum Credit, the pay day lender with operations in Kenya and Uganda.

Centum’s stake dropped to 36 percent after other investors bought stakes in the lender

Yesterday, Centum announced that it had sold off 25 percent of its shareholding in the lender. The firm did say how much the transaction was worth but its annual report for 2016/2017 indicates that its shareholding in the firm was valued at Sh2.117 billion.

What the investment firm also failed to say in the statement forwarded to Nairobi Securities Exchange (NSE) is that Khan has been the biggest individual beneficiary of its shareholding at Platcorp.

By last year, Khan had earned Sh219 million from the Platcorp shareholding.

Here is how it happened!

Up to September last year, Khan was a non-executive director at the investment firm where billionaire Chris Kirubi and the government of Kenya are the majority shareholders.

He was also the chairman of the company’s board audit committee and had served in the board for three consecutive terms from 2008.

In January 2008, Khan set up his investment firm, Cassia Capital Partners to compete with other firms for investment deals. So when he was appointed a director at Centum in November that same year, it was as if a fish had landed on water.

When Centum was working on the finer details of Platcorp acquisition, Khan was fully in the picture and used his position as a director to wiggle himself into the deal.

To acquire the stake, Centum was to incorporate a company which would hold its shareholding at Platcorp. This holding company was his first and biggest chance of using Centum’s reputation and resources for his own benefits and he had to grab it irrespective of the ethical questions it posed.

In December 2012, the holding company, Kilele Holdings was incorporated in Mauritius with Centum holding 79 percent and Khan through Cassia holding 21 percent.

The following year, Kilele acquired 45 percent in Platcorp. Centum did not state the value of the deal when it was announced. However, the listed firms annual report puts the initial investment value at Sh1.07 billion.

Effectively, this meant that Centum had invested Sh845 million into the deal while Khan had put in Sh225 million.

In 2016, Centum paid Khan Sh444.9 million almost double his initial investment value to buy him out of Kilele Holdings.

At the time he was selling his stake to Centum, the Kilele shareholding in Platcorp had grown to Sh2.119 billion from Sh1.07 billion according to the listed investment publicly available annual report.

Not a bad bargain!

 

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