Equity Bank CEO James Mwangi. He has earned about Sh1.6bn over the past three years from share disposal. Photo/FILE
What you need to know:
Regulatory filings show that foreign investors raised their stake in the bank to 49.36 per cent in November, up from 46 per cent in December 2012 and 40.82 per cent in October 2011.
International investors now only need to buy shares equivalent to 0.64 per cent worth Sh782 million to own more than half of the bank, which would turn the lender into foreign-owned based on the Central Bank of Kenya classification.
Equity’s share movement and steady dividend payout have made the lender one of the most sought-after counters both by short and long- term investors, according to stockbrokers.
Equity Bank has inched closer to becoming a foreign lender as purchase of shares by investors outside Kenya nears the 50 per cent mark.
Regulatory filings show that foreign investors raised their stake in the bank to 49.36 per cent in November, up from 46 per cent in December 2012 and 40.82 per cent in October 2011.
This means that international investors now only need to buy shares equivalent to 0.64 per cent worth Sh782 million to own more than half of the bank, which would turn the lender into foreign-owned based on the Central Bank of Kenya classification.
Since the bank’s debut at the Nairobi Securities Exchange (NSE) on August 7, 2006, its stock has appreciated the most over the six-year period, opening the way for investors to skim their holdings at decent capital gains.
The stock has appreciated by more than 900 per cent since listing when share splits and bonuses are taken into account, a performance that has attracted investors’ attention because of the rate at which the bank has created wealth for its owners, including employees, directors and founders.
The bank’s share has gained 30 per cent over the past year to the current price of Sh32.5 —pushing the lender’s market valuation at the Nairobi bourse to Sh120.3 billion.
This has seen Equity rank as the second most valuable bank at the NSE behind KCB with a Sh135.7bn market capitalisation. Barclays Bank’s valuation stood at Sh95.5bn, while that of Standard Chartered was Sh93.3bn.
Equity’s share movement and steady dividend payout have made the lender one of the most sought-after counters both by short and long- term investors, according to stockbrokers.
This is what prompted UK-based PE firm Helios to make a U-turn over a pledge to reduce its stake and commit to remain the largest shareholder in the lender on improved returns.
Helios holds a 24.45 per cent stake in the lender that rode on low-cost financial services to gain a large market share in the retail and SME banking segments. The increasing share of foreign investors’ interest in Equity comes as local investors, especially its founders, reduce their shareholding.
Individual top shareholders of Equity have since 2008 harvested millions of shillings from the sale of their stocks after the end of a two-year lock-in period for anchor stakeholders.
The principal shareholders were barred from selling their shares as a condition for listing on the NSE. The late Nelson Muguku’s family loosened their grip on the bank after the transfer of shares worth more than Sh500 million last year.
The family, for instance, cut its shareholding from 1.35 per cent in May to 1.08 per cent in November after selling 10 million shares currently valued at Sh325 million.
The bank’s chief executive, James Mwangi, has earned about Sh1.6 billion over the past three years from share disposal that he said was dictated by regulations that bar an executive director of a bank from holding more than five per cent of the institution’s capital.
His direct stake has dropped to 3.45 per cent from 5.49 per cent.
Local individual investors now control 16.01 per cent of the bank, from 26.21 per cent in October 2011, while institutional investors have increased their stake to 34.63 per cent from 32.97 per cent in the same period.
