Ugandan Business Mogul Bitature Ordered to Pay South African Firm $35m

In 2014 Patrick Bitature, owner of Uganda’s Simba group of companies, was on the best of terms with Vantage Capital, a South African-based fund manager, one of the largest mezzanine funders in Africa.

To finance the completion of the construction of Skyz Hotel in the Kampala suburb of Naguru; and Moyo Close apartments in Kololo, one of the most upscale neighborhoods in Uganda, Vantage Capital lent Simba Property Investment US$10m. And both parties were effusive about the agreement.

“Vantage brings an important and exciting new model of financing to the East African region,” Bitature was quoted as saying. “Simba Group is pealed to have found a strong mezzanine financing partner.”

On their part, Vantage was only too happy to be in bed with Simba Group.

“Theirs is the kind of story that underpins our Pan African investment strategy of supporting mid-market family-owned businesses that are seeking to raise growth capital without having to dilute their shareholding,” Warren van der Merwe, then Chief Operating Officer of Vantage Capital said. “This is the kind of group that we would like to back in future transactions.”

But barely 10 years later, the two parties are at each other’s necks. What happened?

In June 2021, adverts appeared in the Uganda local place offering Bitature’s properties for sale. He also took out adverts warning against the said sale and warned the public about it.

It turned out that the Ugandan High Court had ruled that the agreement between Vantage and Simba was valid, and sent the two into arbitration. Vantage tried to transfer Simba’s shares as per the agreement, but the Uganda Registration Services Bureau declined to do so, claiming that the case was under arbitration.

In response, Vantage Capital filed an application in the High Court of Uganda seeking an injunction against Simba Group to stop it from doing several things, amongst which was borrowing money from KCB Uganda and KCB Kenya.

In its application, Vantage Capital stated that Simba Group had failed to pay any money since the loan agreement of 2014, neither any of the principal nor the accrued interest. And that Simba Group had gone against the 2014 agreement and tried to change the ownership of the companies, and enter into another loan deal with KCB, against the interests of the applicant.

Vantage Capital also revealed that the whole case was under an independent arbitrator in the London-based International Chamber of Commerce Court of Arbitration.

Simba’s lawyers argued that since Vantage Capital was not registered to do business in Uganda, it was not a legal entity and thus could not sue or be sued. They also argued that Vantage’s directors had been invited to Board meetings but had not appeared, and that in any case, KCB was not a party to the agreement with Vantage Capital. They asked that the application be thrown out.

In her ruling, Justice Susan Abinyo largely agreed with the applicants and granted the injunction against the Simba Group. On whether Vantage was a legal entity in Uganda, she noted that Simba had actually successfully sued Vantage in Uganda before, and thus the question of whether it had a legal presence in Uganda was already decided by that fact. She also ordered that the arbitration should be completed within six months of her ruling, which was made on March 2023.

So on July 31st, 2023, the arbitrator, Prof Fidelis Oditah, gave his ruling. And directed that Simba Group pays Vantage Capital US$35.8m, the outstanding loan balance as of Feb 2023. In addition, Simba was ordered to pay costs amounting to US$ 357,318.