SBM’s bid to halt a Ksh2.5B Fidelity Bank lawsuit fails as Kenya’s High Court rules fraud claims deserve local judicial review.
Nairobi, February 20, 2025 — The High Court of Kenya has dismissed SBM Holdings Limited’s second attempt to stop a Ksh2.5 billion compensation lawsuit filed by former shareholders of Fidelity Commercial Bank, ruling that the application lacked merit.
Justice Francis Gikonyo declared that SBM’s bid to halt proceedings should have been pursued through an appeal rather than a fresh motion to stay the case.
The case dates back to 2016, when SBM Holdings — a Mauritius-based multinational financial group — signed a “Head of Terms” agreement to acquire Fidelity Commercial Bank.
This preliminary agreement, signed on November 17, 2016, laid out the transaction framework, including the possibility of additional compensation based on Fidelity’s net asset value.
A formal Share Purchase Agreement (SPA) was executed on March 28, 2017, finalising the acquisition. However, disputes soon followed.
Led by businessman Sultan Khimji, the former shareholders accused SBM and the Central Bank of Kenya (CBK) of:
The plaintiffs are seeking Ksh2.5 billion in damages.
SBM argued that the SPA required arbitration in London. The CBK supported this, maintaining that any disagreements arising from the sale were to be resolved outside Kenya.
However, in July 2024, the High Court ruled that the shareholders’ allegations of fraud and coercion warranted a judicial hearing in Kenya.
In his February 2025 decision, Justice Gikonyo emphasized that SBM’s claims had already been reviewed and rejected. He stated that the bank’s only recourse was to appeal the earlier ruling, not bring up the matter again in new proceedings.
“This court will not entertain a disguised appeal dressed as a fresh application,” Gikonyo ruled.
This legal battle highlights the complexities of cross-border bank acquisitions, particularly when international buyers like SBM face local shareholder claims of fraud and unmet contractual obligations.
It also brings into question the role of regulators like the CBK and whether their involvement in private-sector M&A should be subject to greater scrutiny.
📌 Key Takeaways
- SBM’s application to stop proceedings was dismissed on Feb 20, 2025
- The suit stems from Fidelity Bank’s 2017 acquisition
- Shareholders allege fraud and breach of contract
- Court upheld Kenya’s jurisdiction despite London arbitration clause
- High Court trial to proceed, with major implications for future cross-border deals
