The United Kingdom government has moved to liquidate and inherit assets held by Liverpool-based SPS Sportsoft Limited, a gambling software and support services firm which has the same shareholders as SportPesa.
Kenyan based Pevans East Africa Limited is the biggest client to SPS Sportsoft Limited.
SportPesa Global Holdings Limited (SPGHL), which owns SportPesa’s businesses outside Kenya also fully owns SPS Sportsoft Limited, which provides gaming technology.
Both SportPesa Global Holdings Limited (SPGHL) and SPS Sportsoft Limited filed a notice in the United Kingdom on January 7, 2021 announcing the termination of Paul Ndung’u as a director.
Though the filings did not give reasons for his ouster, Ndung’u fell out with other shareholders in 2017, with the trouble starting in the local market where SportPesa used to operate through Pevans East Africa.
Ndung’u and Asenath Maina, who own a combined 38 percent stake in Pevans, were accused the company’s Chief Executive Officer Ronald Karauri and the foreign investors of locking them out of the firm’s management and strategic decisions since 2017.
Pevans East Africa Limited ceased operations in 2019 after the government declined to renew its operating licence citing billions of shillings in unpaid taxes.
SPS, its parent firm Sportpesa Global Holdings Limited (SPGHL) and Pevans, which used to trade under the SportPesa brand, have common shareholders including Kenyan and Bulgarian entrepreneurs.
“The Registrar of Companies gives notice that, unless cause is shown to the contrary, the company will be struck off the register and dissolved not less than two months from the date shown above,” SPS said a notice dated September 14, 2021.
“Upon the company’s dissolution, all property and rights vested in, or held in trust for, the company are deemed to be bona vacantia, and will belong to the Crown.”
Bona vacantia means ownerless assets, including those of dissolved firms and estates of people who die without a will or blood relatives. Such assets are taken over by the UK government.
A UK company can be dissolved by its creditors or if it fails to comply with its legal obligations.
SPS did not say why it is being liquidated. The move comes after it suffered a major loss of business in Kenya amid shareholder wrangles.
Pevans was its biggest client, paying the Liverpool-based multinational £20.6 million (Sh3.1 billion) in the nine months ended December 2018, accounting for 96 percent of the total revenue of £21.6 million (Sh3.2 billion) in the period.
SPS clients include SPGHL’s subsidiaries trading under the SportPesa brand in Tanzania and South Africa.
SPS ended the period with total assets of £13.2 million (Sh2 billion) that will be surrendered to the UK government, which says it does not inherit liabilities of dissolved firms.
“Property, cash and any other assets owned by a company when it is dissolved automatically pass to the Crown. This is because the law says this happens,” the UK government says on the bona vacantia process.
“Liabilities of a company do not pass to the Crown on dissolution: they are normally extinguished.”
SPS’s creditors risk losing a combined £8.5 million (Sh1.2 billion) that they were owed in the review period.
The company was required to publish its 2019 accounts by December last year but breached the deadline and will now be liquidated without releasing its updated financial statements.
Its dissolution marks another loss for its shareholders notably the embattled tycoon Ndung’u and Asenath who fell out with their Bulgarian counterparts over control and management of the SportPesa entities.
Pevans’ operating licence was cancelled in July 2019 over unpaid taxes and penalties that the Kenya Revenue Authority (KRA) now says stand at Sh95 billion.
The company last reported revenues of nearly Sh150 billion in 2018 in what made it the second-largest firm by revenue in Kenya after Safaricom.
The Bulgarian investors and Ronald Karauri, a Kenyan who is Pevans’ chief executive and also a shareholder in the SportPesa entities, later re-entered the local gaming business under a new company called Milestone Games Limited to which they transferred the SportPesa trade name.
The valuable SportPesa brand was transferred from Pevans to SPGHL for £100,000 (Sh15.1 million) and then to Milestone in transactions that started on June 2, 2020.
Karauri signed the deed of assignment on behalf of Pevans while Kalina Karadzhova acted for SPGHL. Karauri would later emerge with a controlling 54.4 percent stake in Milestone in the roundabout deals.
Ndung’u and Asenath were meanwhile removed from the boards of the SportPesa entities where their stakes were also diluted.
Recent filings by SPGHL in the UK shows that the stake of Ndung’u has dropped to 1.54 percent, down from 17 percent when the multinational was incorporated in 2017.
Asenath’s ownership on the other hand has declined to 1.9 percent from 21 percent over the same period.
The ownership of other shareholders, including Karauri and a group of Bulgarians, has meanwhile increased in a pattern that drew protests from Ndung’u.
The ownership changes came through a rights issue, conducted between November 2019 and last year, in which some of the owners were offered an opportunity to buy more shares at deeply discounted rates.
The dilution saw Ndung’u and Asenath lose a combined Sh1.1 billion as their claims on SPGHL’s net assets declined.
The Kenyan investors are being squeezed out after SPGHL conducted the rights issue in which the other shareholders acquired a total of one million additional shares in two transactions at a price of £1 (Sh151.8) per share.
This was equivalent to 0.45 percent of the company’s book value per share of £218.8 (Sh33,234).