Billion shilling Tatu City takes shape with launch

From left: US Ambassador Robert Godec, Foreign Affairs CS Amina Mohammed, Nancy Muthoni of The Property Show, Tatu City acting CEO Antony Njoroge and Kiambu Governor William Kabogo during Tatu City ground-breaking ceremony over the weekend. [PHOTO: COURTESY/STANDARD]

Construction of homes in the multi-billion shilling Tatu City has formally kicked off in a major breakthrough, following a five-year delay caused by director wrangles and court cases. Last Saturday’s development will calm anxiety among hundreds of buyers and investors in the project whose investments worth billions of shillings had been rendered idle since 2008.

US Ambassador Robert Godec led the groundbreaking in the symbolic event that could tell of a truce among the warring shareholders, ahead of the official visit by President Barack Obama in two weeks. “We hope firms establishing themselves in Tatu City will take advantage of Agoa and increase US-Kenyan trade for years to come,” Godec said. American investment company Rendeavuor had invested Sh10 billion in the project, including the infrastructure development such as road and sewerage.

Tatu City will be home to more than 70,000 residents and 30,000 day visitors and create jobs during its 20-year, phased development. “We are pleased to bring American and other international capital to Kenya and Tatu City, a revolutionary urban development that eases the burdens of urbanisation on Nairobi and creates unique living and business opportunities for families and companies in Kenya’s growing economy,” said Frank Mosier, the lead American investor in Tatu City and Rendeavour.

Foreign Affairs Cabinet Secretary Amina Mohammed and Kiambu Governor William Kabogo were among the guests during the launch, coming after several false starts.  The CS said: “We as a government are about attracting investment, creating jobs, creating opportunities and, of course, creating wealth. So for us, Tatu City is a showcase of the investment Kenya can really attract into the country.”

Mega project

Godec’s presence could be an endorsement by the US of the mega housing project and Kenya’s first private municipality promoted by Rendeavuor. Having Ms Mohammed, the top diplomat in President Uhuru Kenyatta’s government, to grace the occasion could also be a pointer to the endorsement from State House – five years after then President Mwai Kibaki skipped a similar event last minute.

American billionaire Frank Mosier, the managing partner of Kazimir Partners, is the co-lead investor in the project alongside his long-term colleague New Zealander Stephen Jennings. The duo founded and made a fortune in Moscow in the 1990s through Renaissance Capital Partners, at one time the single largest investment bank in Russia.

Renaissance has since set up subsidiaries in several African countries, including Kenya, where it is one of the 20 stockbrokerage houses at the Nairobi Securities Exchange. Jennings and Mosier have since left the investment bank to focus on developing urban communities such as Tatu City, in several African countries including Ghana and Zambia. Development of Tatu City has been held back by nearly five years with fresh details revealing for the first time the behind the scenes power play between the directors, way before the near-abortive official launch held on October 26, 2010 in Nairobi. An invite-only launch that would be graced by President Kibaki on that Tuesday mid-morning turned out rather lackluster when he failed to turn up moments before he was scheduled to speak.

The Standard can now reveal, for the first time, that local shareholders including former Central Bank of Kenya Governor Nahashon Nyaga and a Mr Steve Mwagiru were already feuding.

 Leaked email

In a leaked email conversation in April of that year, Mr Mwagiru had warned one of the owners that their battle was ‘now bare knuckles’. It was not clear yet on whose behest President Kibaki would be attending the launch. Tatu City has been conceived in early 2008, where the one of the Belgian coffee growers was exiting.

The huge coffee estates behind Kenyatta University were on the market, and Mwagiru had got wind of it. In interviews with different shareholders, it is clear that Mwagiru stepped in search of a potential partner in the acquisition. That is how billionaire Jennings, the lead foreign investor was roped into the Tatu City project.

Already weighed down by falling prospects in developed economies, which were hardest hit by the global financial crisis, the idea of investing in the frontier markets seemed ideal – he told The Standard in a past interview.

In the acquisition of the first property at a price of $20 million (Sh2 billion), Jennings and the local shareholders were 50:50 partners. About $10 million (Sh1 billion) would be advanced as loan to the local shareholders, out of the sum paid to the Belgian owners. Nyaga told The Standard in a recent interview that he owned 100 per cent stake in the Mauritius-based company that held the 50 per cent stake in Tatu City. However. recent rulings in Mauritian Courts have overruled his proposition, according to documents in our possession.

Businessman Vimal Shah is also listed as a shareholder in ownership documents. But Jennings and his team claim to have bought out the loan when it had become too expensive and risked to go into default. An audit of the sales and loan terms and repayment thus far is pending, and could finally unlock the wrangles.