A Safaricom share application centre during the launch of its IPO in 2008. Photo/FILE
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All other categories of investors also reduced their holdings in the review period save for foreign institutional investors who increased their stake to 5.1 billion shares from five billion shares.
The stock’s performance has been linked to the company’s increased profitability in recent years, a move that has seen it raise its dividend payout.
While the small investors continue to sell their holdings, high net worth investors are increasing their stake in the telco in what is seen as a long-term investment strategy.
Nearly 40,000 Kenyan retail investors have sold their Safaricom shares in the past one year, taking advantage of the telco’s stock rally to cash in a total of Sh3 billion.
Regulatory filings show that the number of Safaricom shares held by local investors dropped to two billion in May from 2.2 billion in the same month last year.
All other categories of investors also reduced their holdings in the review period save for foreign institutional investors who increased their stake to 5.1 billion shares from five billion shares.
Local, small investors, who mostly bought into the telco during its 2008 initial public offering (IPO), however made the most aggressive exits from the telco.
This has seen their number drop to 633,117 from 671,793, a move that has been linked to profit-taking. Safaricom’s stock has gained 88 per cent over the past one year to trade at Sh12.75, having hit highs of Sh13 earlier this year.
The stock’s performance has been linked to the company’s increased profitability in recent years, a move that has seen it raise its dividend payout.
The firm’s net profit rose 31.4 per cent in the year ended March to stand at Sh23 billion, helped by growth in non-voice business lines including SMS, mobile Internet and money transfer service M-Pesa.
This saw the telco declare a dividend of Sh0.47 per share, up from Sh0.31 for the previous financial year. The rising stock has given small investors an opportunity to exit at a profit unlike their peers who sold their shares earlier before the share rally that started in last year’s second half.
The company sold 10 billion shares to the public at a price of Sh5 a piece in 2008, attracting local and foreign investors who placed bids worth Sh231 billion, an oversubscription of 360 per cent.
Soon after its listing, the telecom firm’s stock fell steadily and stayed below the Sh5 IPO price until December last year, maintaining a rally that has led to its current trading price. More than 100,000 small investors, however, sold their stakes before the share price picked up as they sought to cut their losses.
Analysts have linked their losses to panic-selling, where investors reduce their holdings when prices start to fall and failure to take profits when stocks surge in anticipation of even higher gains.
While the small investors continue to sell their holdings, high net worth investors are increasing their stake in the telco in what is seen as a long-term investment strategy.
Billionaire investor John Kibunga Kimani, for instance, accumulated more Safaricom shares to reach a total of 10.3 million units worth Sh132.1 million in May.
The investor previously held 8.6 million shares in the telco in May last year, with his latest purchases ranking him as the second largest individual shareholder from third previously.
A Ugandan investor, Winfred Lalani, is the largest individual investor in the telco with 11.6 million shares. Other high net worth investors in the telco include billionaire entrepreneur Baloobhai Patel who has five million shares.
