In a remarkable move that could significantly alter the fiscal scenario of Kenya, the top stockbrokers and fund managers have come together and proposed that the sale of a further 5% of the government’s holding in Safaricom Plc be approved by Parliament.
The proponents of this move claim it could bring in a total of Sh312 billion from the divestiture, an amount never seen before in Kenya. The timing of this proposal is very critical, as the legislators are discussing the partial sale of the telecom giant, which is accompanied by concerns regarding the valuation, the transparency, and the overall impact on the economy.
Their representatives from both KASIB (Kenya Association of Stockbrokers and Investment Banks) and FMA (Fund Managers Association) were giving their testimony before the joint committee of the National Assembly on Finance and National Planning.
They maintained that the sale of government shares through public offering beyond the strategic planned sale would be a huge revenue generator for the government. The price of Sh34 per share for the additional 5% public sale alone could raise approximately Sh68 billion; thus, the total expected receipts could reach Sh312 billion after combining with another 15% stake sale already proposed.
The mentioned plan will see the government transferring a total of 20% of Safaricom shares to private and retail investors. This is in addition to the government’s broader divestiture strategy that has raised strong objections from the opposition and market regulators. The government initially offered a 15% sale to strategic partner Vodacom Group Ltd., with negotiations in progress and regulatory reviews taking place.
“KASIB is ready to help the government to carry out these recommendations, which guarantee that this historical transaction will not only be beneficial to the Kenyan people but also come with the protection of national interests,” KASIB CEO Willie Njoroge said to the members of the legislature in the course of the session.
The organizations reiterated the need for making share ownership among the Kenyan citizens and institutional investors even wider in order to strengthen their participation in the capital markets.
The request for a larger public offering is being made at a time when there is a lot of discussion about the sale and its regulation, with critics saying that the funds need to be very carefully managed in order to prevent the asset from being undervalued or foreign control over it from being too strong, which is one of the most valuable corporate assets in Kenya.
Parliament’s hearings on this issue are likely to be prolonged for weeks, with the input from regulators, market analysts, and Safaricom executives already scheduled to play a decisive role in the final decision.
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