Foreign investors own close to half of stake in Equity
Equity Bank's chief executive James Mwangi at a media briefing on the group pre-tax profit in the third quarter of 2012 in Nairobi on November 6, 2012. Photo/JAYNE NGARI
What you need to know:
Regulatory filings show that foreign investors own 46.24 per cent of the bank compared to 40.82 per cent in October last year.
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 speed at which the bank has created wealth for its owners.
The bank’s share has gained 38.64 per cent over the past year to the current price of Sh23.75 — pushing the lender’s market capitalisation at the Nairobi bourse to Sh87 billion, making it the most valued bank at NSE.
Equity Bank is on course to become a foreign institution as international investors step up their purchase of the lender’s shares inching them closer to the 50 per cent mark.
Regulatory filings show that foreign investors own 46.24 per cent of the bank compared to 40.82 per cent in October last year.
This means that international investors now only need to buy shares equivalent to four per cent to hit the 50 per cent mark, which would turn the bank into foreign-owned, based on the Central Bank of Kenya classification
“Given the sustained growth that Equity Bank has achieved over the years, we are seeing foreign investors get more attracted towards investing in us,” Equity CEO James Mwangi told the Business Daily in a past interview.
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 speed at which the bank has created wealth for its owners, including employees, directors and founders.
The bank’s share has gained 38.64 per cent over the past year to the current price of Sh23.75 — pushing the lender’s market capitalisation at the Nairobi bourse to Sh87 billion, making it the most valued bank at NSE.
KCB Group market capitalisation stood at Sh86.8 billion while that of Barclays Bank was at Sh81.7 billion despite the two banks having a larger asset base compared to Equity. KCB assets stood at Sh371 billion in September, Barclays (168 billion) and Equity (Sh232 billion).
The increasing share of foreign investors’ interest in Equity Bank comes as local investors, especially its founders, reduce their shareholding.
The individual top shareholders of Equity Bank have since 2008 harvested billions of shillings from the sale of their stock 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.
This has seen the likes of the late Nelson Muguku’s family loosen its grip on Equity Bank after the transfer of shares worth Sh220 million within the three months to June.
This saw the family cut its shareholding from 4.3 per cent in October last year to 2.03 per cent in December and 1.76 per cent in June after selling 10 million shares.
The Muguku family cut back its stake by 12.9 million shares within the nine months to September 2011, earning about Sh250 million.
The bank’s chief executive has earned about Sh1.6 billion over the past three years from share disposal he said were dictated by regulations barring 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 18 per cent of Equity Bank from 26.21 per cent in October last year. Institutional investors have increased their stake in the bank from last year’s 32.97 per cent to the current 35.73 per cent.
Top foreign investors include private equity fund Helios with a 24.45 per cent stake while local institutional investors are led by British American Investment Companies Kenya.
