Table of Contents
Key Points
- Mastermind Tobacco's assets, including its Syokimau factory and Kimathi House, will go under the hammer on Jan. 24, 2025, over debt.
- Mastermind Tobacco's assets, including a Syokimau factory, will be auctioned following financial collapse and I&M Bank administration.
- The firm stopped cigarette production in June 2023 and laid off 1,000 employees after being placed under administration by I&M Bank.
Mastermind Tobacco, once a dominant player in East Africa's tobacco industry, is preparing to see its extensive asset portfolio go under the hammer in January, marking the end of an era for the company founded by the late Kenyan tycoon Wilfred Murungi in the 1980s.
The firm, known for its flagship Supermatch cigarette brand, had operations spanning Uganda, Tanzania, Malawi, and Zambia, with additional footprints in the Democratic Republic of Congo (DRC), Somalia, and South Sudan.
Despite weathering fierce competition from British American Tobacco (BAT) and long-running tax disputes with the Kenya Revenue Authority (KRA), Mastermind Tobacco has succumbed to financial pressures following the demise of its founder in 2021.
Debt crisis and administration
Mastermind Tobacco halted cigarette production in June 2023 and laid off about 1,000 employees in December, four days after being placed under administration by I&M Bank over an undisclosed debt. The bank’s move has set the stage for an auction of the company’s prime assets on Jan. 24, 2025, according to a notice from Double ‘O’ Auctioneers.
Key properties up for sale include the company’s head office and factory in Syokimau, the 11-story Kimathi House in Nairobi, and land holdings nationwide. The Syokimau factory, on a 30-acre plot, is valued at Ksh2.5 billion ($19.3 million), while the headquarters and warehouses are priced at Ksh1.5 billion ($11.6 million).
Other assets include a six-acre plot in Nairobi’s Ofafa estate valued at Ksh350 million ($2.7 million) and Kimathi House, which earns Ksh7 million ($54,025) in monthly rental income and is priced at Ksh850 million ($6.56 million). Additional land in Embu, Njoro, Bungoma, and Migori will also be sold.
Murungi’s unfinished efforts to revive Mastermind
Before his death, Murungi moved to address Mastermind Tobacco’s financial troubles. In 2021, he agreed in court to sell 12 properties to settle Ksh1.54 billion ($11.9 million) in taxes owed to the Kenya Revenue Authority. He also sought to sell a 51 percent stake in the company to Philip Morris, the maker of Marlboro cigarettes, aiming to stabilize operations.
Despite these efforts, the company’s financial troubles deepened, ultimately leading to its current crisis. A valuation of the assets indicates their total worth is in the billions of shillings, though they may fetch lower prices in the upcoming auction.
Mastermind Tobacco’s downfall signals the end of a pioneering legacy in Kenya’s tobacco sector and serves as a stark reminder of the challenges faced by indigenous businesses in navigating economic and regulatory pressures.
