A Consolidated Bank branch in Nairobi. NSSF is in talks with pension firm Laptrust to acquire 11.2 pc stake in bank. FILE
National Social Security Fund (NSSF) is set to sell its entire 11.2 per cent stake in Consolidated Bank to pension firm Laptrust in a deal estimated worth more than a quarter billion shillings.
Acting NSSF managing trustee Hope Mwashumbe on Wednesday told a parliamentary committee that the fund is in talks with Laptrust, which covers workers of local authorities, to acquire the stake.
“We have settled on Laptrust but haven’t agreed with them on the price at which to dispose the shares,” Ms Mwashumbe said.
The pension fund already owns 2.4 per cent of Consolidated Bank’s ordinary shares, and will buy the NSSF-owned shares under pre-emptive rights — which means NSSF cannot cede ownership in the open market until existing investors have been given a chance to buy the shares.
“We hired a consultant – PKF Consulting — last year to evaluate the value of the shares and advise us on disposal. The valuation done on September 2012 stated the shares were worth Sh247, 694, 265, higher than the nominal value recorded in our books,” said Ms Mwashumbe.
Other owners of the bank are the government with a 50.2 per cent stake, Kenya Pipeline (3.6 per cent), Kenya National Examination Council (3.5 per cent) and NHIF (three per cent).
Consolidated Bank was formed in 1989 as a result of a merger of nine insolvent banks including the Estate Finance Company of Kenya, Estate Building Society of Kenya and Jimba Finance.
The government shareholding is held by the Deposit Protection Fund, which was behind Consolidated Bank and the other state-owned firms converting their bank deposits in the collapsed banks into shares.
NSSF holds an 11.2 per cent stake in the bank in the form of 2,225,000 ordinary shares, making it the second largest investor after the government.
The state-owned pension fund also holds 8.05 million preference shares in the bank, equivalent to 22.3 per cent of the 36 million preference stocks issued by the lender.
Preference shares have the first claim on dividends but unlike ordinary shares, have no voting rights.
NSSF has, however, not earned dividends on its ordinary and preference shares in the bank, prompting it to initiate talks with Laptrust to dispose its interest.
“The fund has never earned anything on this investment yet the bank is now making profit. The investment is recorded in the NSSF books at a nominal value of Sh205 million,” Auditor-General Edward Ouko noted in a recent assessment of NSSF’s investment portfolio.
Despite being profitable since 2007, the bank has been ploughing back profits to clear its accumulated losses that stood at Sh576 million six years ago. Last year, it reported a profit of Sh175.9 million.
The board leaned towards listing at the Nairobi Securities Exchange as the preferred method of privatisation. In 2011, the bank cleared its accumulated losses clearing the way for a listing at the NSE.
