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Kirubi now largest individual investor in Kenya Power

Posted by Administrator on December 6, 2011

Chris Kirubi

Chris Kirubi

The restructuring of the Kenya Power balance sheet has seen businessman Chris Kirubi join the list of the electricity distributor’s top ten shareholders and become the largest individual investor.

The power firm’s 2011 annual report show that Mr Kirubi more than doubled his stake to 0.799 per cent at the end of August compared to 0.369 per cent a year earlier—pushing his worth to Sh225 million.

This has seen the businessman join the list of Kenya Power’s top 10 shareholders from position 18 last year and jump Mr Alimohamed Adam to become the firm’s largest individual shareholder, cementing his stock among Kenya’s wealthiest personalities. Stockbrokers says Mr Kirubi built the bulk of his stock in the electricity distributor in December when Kenya Power offered  more than 480 million shares through a rights issue that a number of shareholders including the government opted not to buy whole the shares allocated to them.

This opened the window that allowed investors such Mr Kirubi to buy the shares that other shareholders had left on the table in a process that has changed the structure of Kenya Power’s top shareholder list.

“Mr Kirubi bought the bulk of the additional shares during the rights issues since his shareholding was less than 0.4 per cent at the time of the rights,” said Mr Johnson Nderi, a research analyst at Suntra Investment Bank.

The power company  joins a list of firms, including Centum Investment (26.8 per cent), Haco Tiger Brands (51 per cent), and Capital FM,  where Mr Kirubi is the single largest  individual shareholder.

But his shareholding in Kenya Power is small relative to other shareholders including the government (50.08)—meaning that Mr Kirubi’s has little voting rights to dictate the strategic direction of the power firm despite being the largest individual shareholder.

Other top shareholders include Standard Chartered Nominees (12.8 per cent) CFC Stanbic Nominees (4.5 per cent) and the National Social Security Fund (4.1 per cent).

Kenya Power in December   restructured its balance sheet in a process that saw the government convert its 794, 962, 491 preference shares into ordinary units,  which was followed by a Sh9.5 billion rights issue.

This pushed its shareholding to 69.7 per cent from 40.4 per cent, which was later cut to 50.08 per cent after it  opted not to buy additional shares during the rights issues—offering investors like Mr Kirubi an opportunity to buy more shares and boost their holding in the power firm.

The power firm was eager to keep the state’s  shareholding at slightly above 50 per cent to give it the status of a state-owned firm while offering comfort to private investors that Treasury was not intending to launch a take-over bid.

Kenya Power’s share price has fallen 20 per cent in the past six months to the current price of Sh16.35, meaning that the bear run at the NSE has cost shareholders Sh8.5 billion in the six months period. Analysts reckon that the upbeat growth prospects and capital restructuring that increased its shares and boosted its liquidity has made Kenya Power look attractive to both short term and long term investors.

“The restructuring increased its liquidity and made Kenya Power stock attractive to short term investors who prefer counters they can easily move in or out,” said Francis Mwangi, an analyst at Standard Investment Bank.

“The fact that the power firm is hedged against the country’s economic cycles including inflation makes it favourable for long term investors.

Demand for electricity will continue rising and Kenya power is also well cushioned from rising costs,” added Mr Mwangi.

momondi@ke.nationmedia.com

Source: http://www.businessdailyafrica.com/Kirubi+now+largest+individual+investor+in+Kenya+Power++++/-/539546/1284240/-/869b5g/-/

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