Kenya woos Uganda with board seats in extended KPC sale

Kenya has granted Uganda two exclusive board seats in the Kenya Pipeline Company in an effort to woo investors from the landlocked neighbour into the extended Initial Public Offer (IPO).

Nairobi on Thursday promised Kampala at least two directors to the KPC board, provided it holds not less than 20 per cent of the company’s issued share capital.

Sources familiar with the deal told the Star that the revised timetable follows investor feedback during the offer period and aligns with the objectives of broad-based ownership, stronger minority investor protections, and the long-term success of KPC as a regional entity.

This gives Uganda formal influence over key strategic decisions, recognising its reliance on KPC’s pipeline and storage network for fuel imports routed through Kenya.

“Uganda receives no automatic ownership, proceeds, or preferential economic treatment unless it acquires shares through the offer or the secondary market.”

The memorandum makes clear that these amendments do not create new share classes or alter existing voting rights.

The changes come at a time the government is racing against time to raise Sh106.3 billion from the sale of 65 per cent stake in the strategic oil agency. The funds are to be applied within the national budget framework as seed capital for priority national infrastructure, strategic investments, and fiscal consolidation.

Last week, the Privatisation Commission was forced to seek an extension from the Capital Markets Authority (CMA) due to slower subscription.

The offer is going for Sh9 per share, with various fund managers insisting that it is grossly overvalued.

Under the offer structure, 60 per cent of the shares are reserved for Kenyan investors and employees, with the balance available to foreign and regional investors.

During the week, activities at the Nairobi Securities Exchange (NSE) slowed marginally after bullish weeks since January.

Data from the weekly bulletin by the Central Bank of Kenya (CBK) shows that the NASI decreased by 0.86 per cent while NSE 25 and NSE 20 share price indices increased by 0.63 per cent and 3.29 per cent, respectively.

Market capitalisation and equity turnover decreased by 0.86 per cent and 8.84 per cent, respectively, while total shares traded increased by 1.58 per cent.

Uchumi Supermarket’s share continued to dominate the top five-gainer list, closing the week at Sh1.84, having gained close to seven per cent compared to the previous trading day. 

The retailer began the year with a share price of Sh0.94 and has since gained 95.7 per cent on that price valuation, ranking it first on the NSE in terms of year-to-date performance.

Analysts say that shareholders can be optimistic about it, knowing the stock has accrued 46 per cent over the past four-week period alone—second best on NSE.

In the money market, the Treasury bill auction of February 19 received bids worth Sh70.9 billion against an advertised amount of Sh24 billion, representing a performance of 295.6 per cent.

This is despite interest rates on the 91-day, 182-day, and 364-day falling further to an average of 7.1 per cent.

Bond turnover in the domestic secondary market increased by 57.21 per cent during the week under review to 102.9 billion, the highest in the past 14 months.

In the international market, yields on Kenya’s Eurobonds increased by 8.44 basis points on average, as investors reacted to news that Kenya had raised Sh290 billion in a Eurobond sale. The proceeds are being earmarked for partly refinancing existing debts, which mature in 2028 and 2032, and to bridge the budget deficit.