When Naushad Merali made Sh1.6 billion profit in an hour
Updated Sunday, September 8th 2013 at 23:53 GMT +3 |
| Then Kencell managing director Phillipe Vanderbrouck (left) and Naushad Merali at a press conference in April 2000. [PHOTO: FILE/STANDARD] |
By Kenneth Kwama
KENYA: Naushad Merali, the man regarded as Kenya’s most-suave business mind, holds the record for the biggest profit ever made in the shortest time in the country’s corporate circles.
In 2004, he pioneered a fabled deal that earned him Sh1.6 billion in one hour.
The out-of-the-ordinary deal took place in March 2004, when an executive from French mobile firm Vivendi, which was Merali’s co-shareholder in the mobile firm then known as Kencell, came to Nairobi to inform him that they (Vivendi) had signed a contract to sell their 60 per cent stake in Kencell to MTN of South Africa.
The French executive reportedly informed Merali that his firm had agreed to sell its stake to MTN for Sh18 billion. At the time, MTN was said to be so confident about clinching the deal that it even leaked the news to the South African press.
Merali was not happy with the South Africans by virtue of the fact that he already owned 40 per cent of Kencell. The Asian tycoon had what is referred to as pre-emptive rights in business. This gave him priority over any other buyer in the event his co-partner, Vivendi, wanted to sell out.
Unfortunately, he couldn’t raise the Sh18 billion MTNwas willing to pay for Vivendi’s shares in Kencell. This put him in a tight situation, but instead of resigning in defeat, he reached out to another notable moneyman, Mo Ibrahim.
Round of negotiations
Somehow, he got into an arrangement with Mo — then owner of Celtel. Mo gave him a loan and he acquired Vivendi’s shares. He outsmarted MTN by paying Sh18.4 billion (US$230 million) — calculated at a dollar price of Sh80, at around 7pm on the material day. He now owned 100 per cent of Kencell.
Incidentally, as he was finalising the deal with Vivendi, the Celtel group was waiting in another room. After buying the shares, Merali and his team rushed to meet the Celtel team led by Mo Ibrahim for another round of negotiations.
Think twice
According to reports, an hour after sealing the Vivendi deal - at 8pm to be precise, Merali sold the shares to Celtel for Sh20 billion, coming out with a cool Sh1.6 billion profit.
Such is the genius of Merali — the man sometimes referred to as Kenya’s Donald Trump because of his business acumen that many have likened to that of the famous US investment mogul.
“He rarely makes business mistakes,” an investment banker said of Merali.
“The lesson corporate Kenya should learn from his past dealings is that when you see Merali selling, there could be fire on the mountain. You would probably be advised to think twice before you buy because those who have bought from him in the past did not succeed with those businesses.”
Merali returned to Kenya in 1973 from the UK, where he was working as a chartered accountant because “his mum had missed him too much and had found a girl for him to marry (his wife)”.
His great grandfather, a spice and cotton trader, immigrated to Kenya from India in 1883 and settled in Lamu.
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