Sale of firms renews rivalry among advisers

The planned privatisation of East Africa Portland Cement Company (EAPCC) and KenGen began to take shape with the invitation of advisers, pointing to a scramble for the contracts among legal and financial advisory firms.

The Privatisation Commission said Friday that it’s looking for specialists to carry out valuations and offer counsel on the best way for the government to sell part of its stakes in the firms.

It’s not certain whether EAPCC and KenGen will be sold before the close of this financial year, but what is clear is the expected stiff battle for the contracts among the deal-makers looking to keep their revenue streams steady.

The government owns 70 per cent of KenGen and has a 52.3 per cent interest in the cement-making firm, which includes a 25.3 per cent direct shareholding and 27 per cent stake held by the State-controlled National Social Security Fund (NSSF).

The government aims to raise at least Sh6 billion by next June to help meet the Sh168 billion 2010 budget deficit this fiscal year.

EAPCC and KenGen are marked as the first two parastatals to be off-loaded by the Government in the current financial year, even as it works on a final plan that will see 24 others also placed in private hands.

But with the lengthy privatisation process — placing of bids and evaluation — its unlikely the firms will be placed for sale before the end of the financial year in June given that the application deadline for advisory works is April 8.

This suggests that the government is less likely to raise the targeted Sh6 billion.

But increased interests from deal-makers on the firms this financial year is expected as the recent dip in private corporate finance deals in the wake of an economic meltdown increases the need for privatisation among the advisers looking to keep their revenue streams steady.

“I expect stiff competition and very strong bids to come through,” says Sammy Onyango, the managing partner at Deloitte.

Mr Onyango added that the bidders will be looking at the professional fees and an opportunity to improve their CVs and publicity opportunity.

Members of Institute of Certified Public Accountants of Kenya and Law Society of Kenya are barred from advertising their services and opt to use privatisation transactions to highlight themselves.

The coming privatisation will only be the second since Safaricom in May last year and the first in 2010.

Kenyans will be keenly following the method by which the government will dispose of its interests in the two companies given the severe erosion of public confidence in the Nairobi Stock Exchange (NSE) since the Safaricom offer.