CfC’s foreign ownership hits 78pc at NSE after law change

CfC Stanbic Holdings has became the first firm to have more than 75 per cent foreign ownership following a change of law last year that removed caps on foreign shareholding of listed companies.

The company, which owns CfC Stanbic Bank and brokerage SBG Securities, is 78 per cent foreign-owned up from 75 per cent as at end of September, according to data from the Capital Markets Authority (CMA) covering the quarter ending December 31, 2015.

“In order to support greater vibrancy in market activity I removed foreign ownership limits for listed companies as a way of attracting and encouraging foreign investment and promoting greater liquidity for domestic investors,” said Cabinet secretary Henry Rotich while highlighting regulatory changes made to support market growth.

The CMA had supported the policy change noting certain transactions had been cancelled due to uncertainty relating to foreign shareholding.

Previously CfC had been forced to ensure new foreign buys were matched by sells from foreigners in a bid to comply with the law.

Just before the cap was lifted, the CMA had been forced to order companies to monitor the trading of their shares with a view to ensuring that the foreign-owned stake did not exceed the then legally allowed limit of 75 per cent.

This order came after the Business Daily exposed a number of companies that had breached the limits for years without any action from the regulator.

The Central Bank of Kenya (CBK) does not limit foreign ownership in licensed banks unlike in the insurance market where all operators are required to have locals own a minimum 25 per cent of the institution.

READ: Foreign investors to own 100pc of local-listed firms

Last year, foreign investors pulled out Sh656 million from the Kenyan market with analysts attributing their exits to capital flow back to the United States following a decision by Federal Reserve Bank decision to raise interest rates.

The exits by foreigners was one of the major reasons behind the fall in the main Nairobi Securities Exchange 20 Share Index by more than 20 per cent.

CfC Stanbic Holdings is majority owned by South Africa’s Standard Group which has a 59 per cent ownership.

The foreigners’ accumulation of the stock has increased from 58.50 per cent at the end of December 2011.

CfC was trading at Sh73 per unit in the last session having lost 11 per cent since the beginning of the year.

Other companies in which foreign investors have exceeded 75 per cent ownership include Total Kenya at 94.11 per cent and British American Tobacco at 82.4 per cent.

The two firms exceeded the threshold even before the 75-per cent rule was implemented and the law specifically allowed them to maintain the status quo.

With the change that allows foreigners to again own a 100 per cent of a listed company, Total and BAT do not have to do anything about their shareholding structure.

Kenyan regulators have traditionally fretted about foreign investor ownership, despite it being good for capital inflows, due to the high chances of investors fleeing en masse in times of turmoil thereby resulting in a market crash.

As at end of June last year, foreign free float — referring to the freely trading foreign-owned shares that are not closely held by multinationals — averaged 45 per cent of total free float in large companies, shows data from HTM Capital.