Appetite from institutional investors has made for an oversubscribed initial public offering in Kenya’s state oil pipeline firm, the lead adviser for the transaction said on Wednesday, countering reports of investor apathy.
In the sale that ran from January 19 to February 24, the government offered a 65% stake in Kenya Pipeline Company to raise 106.3 billion shillings ($825.31 million) in what would be East Africa’s biggest ever IPO in local currency terms.
The deal team is reconciling the IPO’s returns, and the results will be issued on March 4.
Nairobi-based lead transaction adviser Belgrad Kenne of Faida Investment Bank declined to disclose the oversubscription level or identify institutional investors, saying only they had contributed to excess demand and that the offering had also snagged a “sizeable” retail investor participation.
The IPO, which was priced at 9.00 shillings per share, has been shadowed by lower valuations by some banks, an extension of the offer period and reports in local media that investors were apathetic.
Such reports have stirred concerns that the stock could become illiquid once it is listed on the Nairobi bourse, since institutional investors such as pension funds or banks tend to hold their shares for longer than individuals.
Of the total stake on offer, 15% is reserved for oil marketing companies, 5% for employees and the remainder will be allocated to local retail, local institutional, East African and foreign investors, with each category receiving 20%.
The government will retain a 35% stake and receive all the proceeds from the IPO.
UGANDA SECURES STAKE IN PIPELINE
The government of Uganda, a landlocked neighbour that relies on the Kenyan pipeline to move its petroleum products through the port of Mombasa, has said it secured a 20.15% shareholding in the company through the IPO.
“Imports through Kenya account for over 95% of Uganda’s monthly demand,” Uganda’s Energy Minister Ruth Nankabirwa told a news briefing on Tuesday, justifying the investment in Kenya Pipeline, which gets 35% of its revenue from Uganda.
The sale of Kenya Pipeline shares is part of President William Ruto’s drive to divest from state companies. The government is also reducing its stake in telecoms operator Safaricom.
The pipeline IPO is likely to surpass the 2008 Safaricom offering, which raised just over 50 billion shillings. In dollar terms, the Safaricom IPO will still rank as the region’s largest due to the weakening of the Kenyan shilling.
