Billionaire Paul Wanderi Loses Court Bid to Stop Auction of His Property Over Sh664 Million Debt

Billionaire Paul Wanderi Ndung’u is set to lose his multi-million-shilling residential property in Nairobi and a farm in Laikipia to auctioneers over a Sh664.8 million debt owed to Equity Bank.

This is after the High Court dismissed his bid to stop the planned auction of the property, ruling that the assets were used as collateral for the loan. 

Wanderi rushed to the court after Garam Investments Auctioneers on February 28th invited interested buyers to bid for the four-bedroom house sitting on 2.8 acres in Gigiri and a 600-acre commercial farm in Laikipia County.

Equity instructed the auctioneer to sell the assets after the parties failed to reach an agreement.

The lender told the court that it gave Wanderi a 12-month interest and principal repayment holiday starting May 18th, 2020, but later defaulted when the debt service became due.

Wanderi argued that the properties are unique and far more valuable than the loan balance. 

“The final condition concerns the balance of convenience; I hold that the plaintiffs have admitted indebtedness of a not insubstantial amount which continues to accrue interest,” Justice David Majanja said in a judgment.

“If the injunction is granted, the debt may continue to balloon to the extent that it eats into the value of the security. Without valuable security, the bank may be unable to recover the debt.”

The tycoon borrowed Sh600 million in September 2019 to finance farm development to increase acreage under its export business.

The farm, comprising three pieces of land, is currently under cultivation of fresh vegetables, sorghum and fodder grass, according to the auctioneer.

The four-bedroom double-storey house in Gigiri, near the United Nations offices, sits on 2.8 acres and consists of the house, a single-storey servant's quarter block, an external kitchen, and a carport.

Wanderi told the court that the bank undervalued the properties and that their sale will result in the loss of jobs. The farm employs 350 people, the court was told.

“That the … property in Gigiri, Nairobi is 2.8 acres fronting Limuru Road adjacent to foreign government missions, in a quiet and beautiful environment fronting the beautiful, historically significant and serene Karura Forest and that this size of the property of such character is otherwise unavailable in the area,” the plaintiff said.

“The plaintiffs consider the market value of Sh550 million placed by the bank in February 2023 is an undervaluation given its unique features.”

He noted that the bank has assigned a market value of Sh1.72 billion and a forced sale value of Sh1.28 billion on the farm.

The farm has an administration block and pack house, permanent store - inputs, workers' quarters, semi-permanent store, garage shed, filed ablution blocks, and animal closures. Other infrastructures include boreholes, pump houses, solar panels stand, water towers, field holding sheds, and two dams.

Wanderi has been fighting for his stake in betting company Sportpesa after he was expelled as a shareholder of Pevans East Africa at zero compensation for his 17 percent stake for non-payment, Business Daily reported.

He is the latest billionaire to face an auction of his properties over bank debt.