International companies Raise Their Stakes in Safaricom

Mergers, Acquisitions and Financial Results

International companies are raising their shareholding in telecoms firm Safaricom Ltd at the Nairobi Stock Exchange as locals and corporates gradually exit. Over the last year, they have increased their stake by 63.34 per cent while the share of Kenyan investors has been on the decline. As at May this year, foreign investors held 2.15 billion shares from 1.32 billion held the same period last year.

Over the same period, local investors reduced their stake from 4.09 billion to 3.3 billion, while local institutional investors cut theirs from 4.47 billion to 4.37 billion.
Foreign individuals have 91.9 million shares which is a reduction from 112.9 million as at May last year.

Safaricom chief investor relations officer Les Baillie at a media briefing in Nairobi last week said since May last year, foreign firms have increased their stake by 8.35 per cent to 21.54 per cent as at the same month this year.

Local institutional investors including pension schemes, insurance providers and collective investment vehicles, and individuals have sold off 0.99 per cent and 7.15 per cent of their shareholding respectively within the same period to 77.54 per cent collectively compared to 85.68 per cent a year ago.

The number of shareholders has also gradually gone down since last year by 5.92 per cent to 775,147 shareholders in May 2010. "While the number of foreign corporates increased by 15.31 per cent, all the other classes of shareholders recorded a decline with local firms having the largest drop of 11.17 per cent," reads in part a document prepared by Safaricom's investor relations department.

Analysts attribute the exit of small shareholders from the firm to the overall market trend where retail investors have reduced their participation in the market and lack of opportunity to make quick gains for speculative investors, who form a huge chunk of the retail investors.

Increased interest from abroad in Safaricom follows a series of meetings the Nairobi-based company held with institutional investors outside the country to provide information about performance and outlook. "The company's management reinforced its strategy to promote investment prospects in Safaricom by undertaking an international investor roadshow in May-June that targeted 60 companies," said Baillie.

Between May and June this year, the firm has held road shows in South Africa, twice in New York, Boston, Rwanda, Uganda, Frankfurt and London. NSSF Uganda and NSSF Rwanda are today the 4th and 8th largest shareholders in Safaricom, respectively.

The mobile phone firm listed 10 billion shares on the Nairobi Stock Exchange in East Africa's largest initial public offering in 2008. In 2009 financial year, the firm reported Sh20.9 billion in pre-tax profit, 37 per cent increase, from Sh15.3 billion last year, driven largely by data business, especially its revolutionary M-Pesa money transfer service.