Reclusive billionaire earns £3.8bn from tobacco stakes

A reclusive Cayman Islands mogul has reaped an estimated £3.8 billion return from his shareholdings in British American Tobacco (BAT) and Imperial Brands after bumper share buybacks, dividend payments and a share price recovery at the cigarette makers.
Kenneth Dart, scion of the US Dart Container foam cups family business, has profited from a rebound in the FTSE 100 cigarette manufacturers after becoming one of the largest shareholders at a time when other investors have shunned the sector, some for ethical reasons.
Through his Camana Bay-based Spring Mountain investment vehicle Dart, 69, whose other investments include a health and wellness centre, has built a holding of more than 10 per cent in BAT, the maker of Lucky Strike cigarettes, and about 7 per cent in the Bristol-based Imperial, owner of L&B.
Dart’s large investments have coincided with the cash-rich Imperial, and more recently BAT, launching big share buybacks that have helped lift their share prices.
Shares in Imperial, which last week unveiled a £1.25 billion buyback, on top of a combined £2.1 billion programme over the past two years, have rallied by about a quarter this year.
Meanwhile in March, BAT launched a £1.6 billion buyback over this year and next. Its shares have risen by 15 per cent this year.
Dart is estimated to have made a “paper” profit of about £1.4 billion on his BAT holding and also received £1.6 billion of dividends over the last five years, meaning his total return is more than £3 billion, according to research for The Times by Panmure Liberum, the City investment bank.
His estimated paper profit in Imperial is about £550 million and he has also received £237 million of dividends, taking his total return to about £790 million.
Rae Maile, the veteran analyst at Panmure Liberum, said: “Dart was buying these positions at a time when many institutional fund managers either could not or would not.
“The stock market has long been concerned about the future of the cigarette industry, in part due to the growth in newer ways of using nicotine either through vaping and heat-not-burn devices, and there was the undercurrent of the ESG [environmental, social and governance] movement too.
“But the industry has not just proven to be resilient, it has continued to prosper, proving those concerns misplaced and delivering a handsome return to Dart.”
Despite stricter regulation and greater awareness of the health risks, the tobacco industry has continued to generate vast cash piles through raising cigarette prices, and in turn funding shareholder returns and investments in new products, including vapes.
The industry has been shunned by some investors, such as Scottish Widows, while Legal & General and Columbia Threadneedle run funds excluding tobacco. Axa, BNP Paribas, ING and Société Générale are among the signatories to the Tobacco-Free Finance Pledge, a UN-supported initiative led by the Tobacco Free Portfolios pressure group.
Dart, who was approached for comment, has kept quiet on his stake-building in big tobacco, intriguing the City and raising speculation in the past over whether his intention was to become an activist investor or even seek further consolidation in the industry, rather than just being a “value” investor.
The self-styled “investor, innovator, explorer and entrepreneur” has a reclusive reputation in the British overseas territory in the Caribbean, despite having amassed a vast portfolio of businesses there via his Dart Enterprises investment company.
He moved from the United States to Grand Cayman, the largest of the islands, in the early 1990s and his interests have spanned property, such as the Ritz-Carlton on Grand Cayman, retail, hospitality and infrastructure, with vows for a “cleaner, greener Cayman”. Developments currently include a new health and wellness centre due to open in 2026.
The tycoon has built close relations with the Cayman Islands government. Dart formed an investment alliance in 2012 to invest in infrastructure projects, ranging from roads to resorts and recycling. More than $1.5 billion has been invested by Dart in properties.
His wealth is estimated at about $6.5 billion by Forbes. He has been building a stake in BAT since at least October 2020 and emerged with a stake in Imperial the following year.
Dart is also known to have invested in the tobacco industry in the past, owning a stake in RJ Reynolds, the American group now owned by BAT.
He is said to believe that the sector has been undervalued because investors have been “spooked” by ethical concerns.
One source previously described him as a “value investor” who does not believe that the tobacco sector will “disappear tomorrow”.