Little known British firm behind Kakuzi

Shareholders are familiar with most UK parent companies of Kenya’s blue chip firms listed on the Nairobi Stock Exchange.

There is the banking multinational Barclays Plc with interests in Barclays Kenya. Then we have the brewing giant Diageo with interests in East African Breweries Ltd and the mobile phone services provider, Vodafone the anchor shareholder in Safaricom.

But mention Camellia Plc and shareholders will be at sea. If you do get one who can correctly place the company’s interests at the bourse, then probably they work in an investment bank or are research analysts.

Camellia Plc has a majority stake in listed agricultural firm, Kakuzi.

This past week the plantations firm reported its half-year profit after tax which rose seven and a half times, thanks to high tea prices, a weak shilling hence raising the fortunes of its UK-based majority shareholder Camellia Plc.

Kakuzi posted Sh126 million after tax profit for the six months to June 2010 compared to Sh17 million for the corresponding period last year.

The rise in company’s earnings was among a slew of strong results from Kenya’s big companies, especially those in the financial sector, pointing to a recovery of the country’s economy.

Kakuzi Group is controlled by Camellia Plc, an international entity with interests in agriculture, horticulture, food storage and distribution and financial services among others. It has a 50.7 per cent shareholding in the NSE listed company.

Camellia, which is incorporated in England and listed on the London Stock Exchange, has a huge presence in emerging countries.

Some of its operations include tea production in India and Bangladesh, production of macadamia in Malawi and South Africa and maize farming in Brazil.

Apart from agriculture, Camellia Plc is engaged in engineering services in the UK, leasing and insurance operations in Bangladesh.

Its operations in Kenya generated about Sh2.5 billion, ranking the East African country its fourth highest earner in operations globally.

UK was the highest sales market with continental Europe coming second and India coming third. Camellia’s total sales for 2009 were Sh28 billion.

The relationship with Camellia has been beneficial to Kakuzi in accessing key markets for its products.

However, in addition to tea, the firm also grows avocados, other horticultural produce as well as rearing livestock. Then, there is the vast track of freehold land the firm sits on.

However, freehold and leasehold land for the 999 years will be chopped to 99 years under the new Kenyan constitution which came into effect on Friday.

But an air of uncertainty remains as to the exact impact the constitutional changes will have on Kakuzi.

“It is important that the Commissioner of Lands issue proper guidelines on how people are going to go about it,” says Mr Ibrahim Mwathane chairman of the Land Sector Board of Kenya Private Sector Alliance. “Companies such as Kakuzi might find themselves caught up.”

Indeed in its latest annual report Camellia raised concerns on land ownership in developing countries.

“In Kenya, Malawi and South Africa there are long term issues concerning land ownership which the group has little control but monitors closely,” Camellia said in its 2009 annual report released early this year.

Should Kakuzi weigh the option of developing its land it can opt to activate its subsidiary company, Estates Services Limited which has been largely dormant.

Kakuzi’s shares were up 20 percent from their lowest trading price of Sh69 over the last 12 months to trade at Sh82.50 during the final day of trading last week.