Big investors reap billions from a bullish stock market

Major corporate actions have sparked a stock price rally at four firms listed on the Nairobi Securities Exchange (NSE), increasing top shareholders’ wealth by Sh12 billion in the past three months, according to the latest market data. 

Investment firm Centum, Britam, Carbacid and Pan Africa Insurance top the list of firms whose share prices rose by between 38 per cent and 165 per cent since September 12, outperforming the NSE-20 Share Index and adding billions of shillings to shareholder wealth.

This has handsomely rewarded top investors such as Dawood Rawat of Britam, Peter Munga of Equity Bank and investment banker Jimnah Mbaru.

The NSE-20 Share Index has gained 5.9 per cent to 4,976 points while the overall market capitalisation also rose 11.6 per cent to Sh1.9 trillion in the three month period.

Mr Rawat, who is a top shareholder at investment firm Britam, saw the value of his wealth rise by a whopping Sh2.5 billion while the value of Mr Munga’s wealth rose by Sh1.5 billion in the three months to December 2013.

Mr Mbaru, another major shareholder at Britam, gained Sh1.5 billion more from his ownership of the firm while the company’s chief executive Benson Wairegi added Sh700 million to his stock market wealth.

Wealth multiplication was also in top gear at Centum where the largest shareholder Chris Kirubi added Sh1.5 billion and at Pan Africa Life where Baloobhai Patel was left Sh400 million richer in the insurance firm and Sh892 million in Carbacid.

Analysts said the gains are linked to the mix of aggressive expansion plans the companies have recently announced and the actions of speculators taking position to gain from a bullish market.

“The stocks have edged up significantly due to recent corporate actions that have attracted investors to the companies,” said Vimal Parmar, the head of research at Burbidge Capital.

Industrial gas and chemicals maker Carbacid posted the highest share price gain of 165 per cent in the three months beginning September – driven by a generous share split and a bonus issue that significantly increased the volume of the company’s free floating shares.

Carbacid last month issued its shareholders one bonus share for every two held and followed it up with a share split of one to five.

The two actions pushed the company’s total issued shares from 33.9 million to 254.8 million.

Carbacid’s stock was priced at Sh146 each on September 12 and is trading at Sh51.50 after the split and bonus.

The resulting share price rally has pushed the company’s market capitalisation to Sh13.1 billion from Sh4.9 billion at the beginning of September, generating billions of shillings in paper wealth for top shareholders.

Carbacid’s corporate actions and the resulting share price rally saw Mr Patel’s 10.9 per cent stake gain Sh892.4 million to stand at Sh1.4 billion. The investor is also waiting to receive Sh11 million in dividends for the year ended July 2013.

Stock traders said Carbacid’s higher share volumes opened an extra window for institutional investors to buy into the firm whose counter was previously characterised by minimal trading due to an acute supply shortage.

Mr Patel has also seen his 19.9 per cent stake in Pan Africa gain Sh460.4 million to Sh1.6 billion following a price rally on the back of increased profitability and share purchases by the company’s parent firm Sanlam.

South Africa’s Sanlam has been accumulating Pan Africa’s stocks, aiming to raise its stake in the firm to 60 per cent from the 50 per cent it held in December 2011.

Sanlam’s shareholding in Pan Africa jumped to 55.8 per cent in August and its intention to buy a total of 9.6 million shares has been seen as the main driver of Pan Africa’s stock rally.

Pan Africa also posted strong results in the half year ended June.

The insurer’s net profit more than tripled to Sh800.1 million, giving the stock new impetus that pushed the share price up 39 per cent to Sh84.50.

Pan Africa and Carbacid’s share price rallies boosted Mr Patel’s paper wealth in the past three months, leaving him with a stock market portfolio of more than Sh3 billion.

Mr Kirubi’s stock market wealth rose by Sh1.5 billion in the past three months as a result of a share price rally that was sparked by his own announcement of intention to buy additional 32.6 million Centum shares.

Traders said the disclosure was the main driver of Centum’s stock price rally in the past three months that has ultimately multiplied shareholder wealth by large margins.

The company’s share price rose 38.7 per cent in the period to trade at Sh34 and investors who took position following Mr Kirubi’s announcement now expect to gain from his share purchases.

Mr Kirubi’s 24.99 per cent stake in Centum is now worth Sh5.6 billion up from Sh4 billion in September.

Mr Parmar said Centum’s unprecedented bid for agricultural firm Rea Vipingo has further endeared it to investors.

Centum has offered to pay Vipingo shareholders Sh50 per share in response to the Sh40 price quoted by British brothers Richard and Jeremy Robinow, arguing that the agricultural firm deserves a higher valuation.

Centum is the only company where Mr Kirubi takes a long-term view away from the active trading strategy he employs in other stocks – entering and exiting top shareholder lists of NSE blue chips such as Safaricom and KCB.

Mr Kirubi earlier this year said he would not sell his shares in Centum even at a price of Sh100 apiece, arguing that the zero-dividend paying firm would reward investors with handsome capital gains in the long-term.

Centum’s peer in the investment segment of the market, Britam, has also minted paper billions for its top owners following a series of acquisitions that have brightened its future prospects.

Britam recently acquired a 25 per cent stake in real estate development firm Acorn and followed it up with the disclosure that it intended to acquire a 99 per cent stake in Real Insurance.

The acquisition of Real will push Britam’s share of Kenya’s insurance premiums to 7.4 per cent from the 4.3 per cent in December through its subsidiary Britam Insurance.

Gain

Britam’s aggressive deal-making has seen its share price gain 87.5 per cent since September to Sh15 or nearly double the IPO price of Sh9.

That rally has left the company’s major shareholders, including Mr Rawat, with billions of shillings worth of additional paper wealth.

Mr Rawat, a Mauritian with an 18 per cent stake in Britam, has seen the value of his shares rise by Sh2.6 billion in three months.

Mr Munga is the second largest shareholder with 329.4 million shares and has added more than Sh1.5 billion to his wealth following the stock price rally. 

Mr Mbaru, who owns 219.3 million shares in Britam, is Sh1.5 billion richer while James Mwangi, another top shareholder, gained Sh525 million during the same period. 
[email protected]