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Millionaire investors in Safaricom cross 10,000

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Capital Markets

Millionaire investors in Safaricom cross 10,000


SCOM

Safaricom headquarters on Nairobi’s Waiyaki Way. PHOTO | DIANA NGILA

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Summary

  • The telecoms operator now has at least 10,000 investors holding shares worth more than Sh1 million each, up from an estimated 8,500 in May 2015, analysts and regulatory filings show.
  • The rising number of high-net-worth investors in the Nairobi Securities Exchange-listed firm has been helped by the rally in its share price over the years.
  • Safaricom’s stock, which has appreciated to the current all-time high of Sh39, has seen the holdings of any investor with at least 25,700 shares rise in value to top the Sh1 million mark.

Safaricom’s #ticker:SCOM share price rally has created an additional 1,500 millionaire investors in just over five years.

The telecoms operator now has at least 10,000 investors holding shares worth more than Sh1 million each, up from an estimated 8,500 in May 2015, analysts and regulatory filings show.

The rising number of high-net-worth investors in the Nairobi Securities Exchange-listed firm has been helped by the rally in its share price over the years.

Safaricom’s stock, which has appreciated to the current all-time high of Sh39,has seen the holdings of any investor with at least 25,700 shares rise in value to top the Sh1 million mark.

The number of the high-net-worth investors excludes top institutions like the National Treasury, Vodafone Group Plc and Vodacom Group Limited. The analysis is based on disclosures of the telco’s ownership distribution and the share price whose rally has enabled more investors to hit the millionaire’s club.

Stockbrokers estimate that about half of the 21,000 investors, who own in excess of 10,000 shares, have at least 25,700 shares.

This indicates that at least 10,000 investors own Safaricom shares worth more than Sh1 million.

Safaricom’s stock traded at Sh15.85 at the end of May 2015 when it took a lot more shares – 63,100 units — for one’s holdings to breach the Sh1 million mark.

Most of the Safaricom millionaires are Kenyans but foreign individual investors, including citizens of neighbouring countries such as Uganda and Tanzania, are also in the list.

Growth in the number of the telco’s high-net-worth investors is a reflection of both its long-term share price gains and more wealthy investors flocking to the country’s most profitable company.

Safaricom’s share price has gained 680 percent since the telco went public on June 9, 2008 via an initial public offering at Sh5 per share.

The company’s Sh18 billion interim dividend that will be paid on March 31 will take its cumulative cash distributions in its life as a publicly traded firm to Sh375 billion.

The entry of Safaricom to the stock market has supplanted other blue-chip firms in terms of concentration of high-net-worth shareholders.

Cigarette manufacturer BAT Kenya, for instance, is now estimated to have 1,000 individual shareholders with stakes valued at more than Sh1 million.

Safaricom also holds one of the largest concentrations of super-rich investors on the NSE.

John Kibunga Kimani, for instance, holds 16.2 million shares worth Sh631 million based on recent disclosures. Moses Thara is another high-net-worth investor in Safaricom who has 10.1 million shares with a current market value of Sh393 million.

A total of nine local investors hold 106 million shares valued at Sh4.1 billion.

A majority of Kenyan individual investors have, however, missed out on Safaricom’s wealth creation. They sold their shares earlier when the telco’s stock fell below the Sh5 IPO price and later on to take profits as the counter took off.

Regulatory filings for August 2020 show that domestic investors, including citizens of East African countries, held 1.5 billion units of the telco’s stock equivalent to a 3.8 percent stake.

This represents a 67.6 percent shrinkage from the 4.8 billion shares equivalent to an 11.9 percent stake they acquired at the IPO.

Foreign investors, including asset managers like BlackRock, JPMorgan and Fidelity, meanwhile more than doubled their combined stake to 10.9 percent from five percent over the same period.

Local institutional investors such as insurers and the National Social Security Fund (NSSF) have also been accumulating the company’s shares.

Individuals investors have been net sellers of Safaricom shares since the telco hit the stock market where its share price initially dropped sharply below the IPO offer price of Sh5 to hit lows of Sh2.5.

More than 250,000 retail investors dropped out before and midway through the telco’s long-term stock rally, which gained momentum from December 2012, foregoing gains of more than Sh80 billion excluding dividends.

The government allocated local investors 4.8 billion shares or nearly half of the 10 billion units sold in the IPO as a deliberate policy to help them share in the telco’s prosperity.

It raised Sh50 billion from the IPO by selling 10 billion shares equivalent to a 25 percent stake in the telco to individuals, local firms and foreign investors.

The hype surrounding the offer saw retail investors apply for 22.6 billion shares or 4.7 times the 4.8 billion units that they were ultimately allocated.

Banks offered their customers loans to buy the shares while investment groups were also encouraged to participate in the IPO.

Some 800,000 new accounts were opened because of the offering, more than doubling the number of investors at the NSE to 1.5 million from the previous 700,000.

Retail investors paid a total of Sh24 billion for the shares which would have a current market value of Sh187 billion, assuming the investors held on to all the stocks to date.

The investors have, however, sold a total of 3.2 billion shares over the years. This has left them with 1.5 billion units that are now valued at Sh58 billion.

The stake held by individuals is expected to continue dropping as local and foreign institutional investors gather more assets and deploy them in buying Safaricom and other stocks.

Safaricom has become a must-have stock for institutional investors who nowadays transact trades in the telco’s shares worth hundreds of millions of shillings per day.

Latest available disclosures show that the NSSF, for instance, invested nearly a quarter of its equities portfolio in Safaricom in the year ended June 2018, raising the portion from 14.8 percent the year before.

The pension fund held Safaricom shares with a market value of Sh15.8 billion in the review period when its total stocks portfolio stood at Sh65.3 billion.



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