Foreign investors’ stake in CFC hits maximum limit
Nairobi Securities Exchange CEO Peter Mwangi with CFC Stanbic official Shiru Mwangi at a past function. Foreign investors in the company’s stock have reached the limit set by the markets regulator. Photo/Diana Ngila
What you need to know:
Filings show international buyers’ shareholding is 74.85pc just below statutory maximum of 75 per cent for NSE-listed firms.
The foreigners’ accumulation of the stock has increased from 58.50 per cent at the end of December 2011.
Foreign investors’ shareholding of CFC Stanbic Holdings has hit the maximum limit set by the capital markets regulator, effectively locking them out of any additional purchase of the stock.
Latest shareholder filings released by the Capital Markets Authority (CMA) show that foreign shareholding of CFC Holdings had risen to 74.85 per cent as at December last year, just marginally below the statutory maximum of 75 per cent for companies listed on the Nairobi Securities Exchange.
The foreigners’ accumulation of the stock has increased from 58.50 per cent at the end of December 2011.
CFC Stanbic Holdings is majority owned by South Africa’s Standard Group, and the foreign investor rise could be a reflection of shareholder shifts following the recent rights issue by the company.
“It creates liquidity pressure on the counter to the extent that if a foreigner wants to buy, one has to look for a foreign seller,” said Standard Investment Bank head of research Francis Mwangi.
The Banking Act allows foreign lenders to own up to 100 per cent shares of a Kenyan bank, but listing regulations limit publicly owned institutions from having more than 75 per cent foreign ownership.
In October last year CFC Stanbic Holdings sold an extra 121.6 million shares to investors in a rights issue at the ratio of four shares for every nine held at a discounted price of Sh33. The stock Tuesday closed at Sh45.75 with only 2,100 shares changing hands.
“The parent company which is South African had underwritten the issue so the increase has to do with it, and the parent company does not trade regularly,” said Kuria Kamau, a research analyst at Kestrel Capital.
The new shareholding structure shows local institutional investors were the ones who ceded their stake in the bank as their holding dropped to 21.46 per cent at the end of the year from 28.25 per cent three months earlier.
Increased participation by the foreigners in the last quarter of the year saw their total holding in the equities market rise to a five-year high of 21.3 per cent.
The investor participation in the equities market peaked in December when they contributed 59.5 per cent of all transactions in a period when many expected them to be exiting the market owing to election jitters.
Last year’s net cash inflow, which is the difference between what sums put in the Kenyan market and that withdrawn by foreign investors, was Sh21.7 billion compared to Sh220 million in 2011.
This saw the NSE ranked as the third best market in Africa last year with an average return of 29 per cent.
“Their markets have been liquid and if you have liquidity one is willing to invest in markets with a higher return but it could also be a vote of confidence in the country,” said Mr Mwangi.
Standard Investment Bank said in a research note on the banking industry it expected returns of CFC Stanbic Holdings to improve as management re-focused its energy and new capital on growing the business after four years or restructuring, which had seen it lag behind its peers in earnings growth.
Other companies in which foreign investors have reached the regulatory shareholding limit are Standard Chartered Bank where the stake held by foreigners is 75.01 per cent, Total Kenya at 94.11 per cent and British American Tobacco at 76.16 per cent.
Companies that had exceeded the threshold before the rule was implemented were allowed to maintain the status quo.
