The capital markets regulator has seized Sh458 million gains that insider trading suspects stood to earn from the ongoing KenolKobil takeover, as shareholders of the oil marketing firm started receiving Sh26.35 billion buyout cash.
The Capital Markets Authority (CMA) in a statement last evening said the seized cash relates to suspicious trades that were initiated through 14 accounts that were frozen in October last year when the buyout of KenolKobil by French firm Rubis Energie was announced.
“The funds surrendered to date relate to 90 percent of the quantum of suspicious trades identified… The recovered funds will be paid into the Investor Compensation Fund,” the CMA said in a statement.
“Upon review of the investigation findings and recommendations, the CMA Board has resolved to initiate enforcement proceedings against the Kestrel Capital executive director Andre DeSimone, Kestrel Capital chairman and founder, Charles Field-Marsham, and their stockbroking agent, Aly-Khan Satchu, through issuing Notices to Show Cause,” added the regulator.
The KenolKobil chief executive, David Ohana, who was part of the initial CMA investigations, was found to have had no case to answer.
Computer forensic firm, East African Data Handlers, retrieved communication from Mr Satchu’s phone showing he had prior knowledge of the deal and used the information to trade on Kenol shares ahead of market announcement.
Insider trading is deemed to have occurred where a person in possession of privileged information which is material, price sensitive and non-public information either trades in securities relying on the information, discloses the same to another person who trades based on the information or encourages someone else to trade relying on the same information for gain or to avoid a loss.
The CMA announcement came as French energy firm Rubis Energie started making payments to KenolKobil shareholders who have accepted its buyout offer, moving the firm nearer to closing the deal and delisting from the Nairobi Securities Exchange.
Rubis announced on Friday that shareholders owning 1.145 billion shares in the oil marketer — equivalent to 96.85 percent of the units not already held by the French firm — had agreed to sell their stock at Sh23 a share.
Some shareholders said they had already started receiving their payments yesterday, primarily those who indicated they wished to be paid through a direct mobile money or bank transfer. In making the payments, Rubis will also be allowed to move the shares to its account through a private transfer.
The French company will pay shareholders who have taken up the offer a total of Sh26.35 billion, while the balance of 37.2 million shares that will be acquired compulsorily will earn the holders Sh855.8 million.
KenolKobil has 1.55 billion issued shares, where Rubis already holds 367.8 million (a 24.99 percent stake) which it bought from Wells Petroleum at Sh15.30 per share or Sh5.6 billion in total in October 2018 in order to lay the ground for the takeover.
Wells Petroleum, which is linked to the late former cabinet minister Nicholas Biwott, stands to make as extra Sh7.70 per share or a total of Sh2.8 billion under the sale terms, which stipulated that Rubis would make good the difference between the selling price of Sh15.30 and the offer price of Sh23 once the buyout was complete.