Helios set to earn dividend on sold Equity Bank stake

Helios EB, the private equity group that two weeks ago sold a multi-billion shilling stake in Equity Bank, is set to earn the 2014 dividend cheque from the lender as per terms of the sale agreement.

Norwegian private equity (PE) firm Norfund, which bought the 12.2 per cent stake from Helios, has disclosed that the transaction was done ex-dividend— meaning that Helios EB will pocket the earnings accruing from the entire 24.45 per cent stake held prior to the sale.

It means Norfund will potentially miss out on hundreds of millions of shillings, going by Equity Bank’s past dividend payment history.

“The proposed transaction is ex-dividend, dividends for the financial year ended December 31 , 2014, will go to Helios,” said Norfund’s director in charge of strategy and analysis Ola Nafstad in an interview.

The ex-dividend clause in the transaction sweetens the deal for Helios, which has already pocketed billions in dividend income over the seven-year period that it held the stake and has also seen the value of its stake in the lender grow more than four-fold.

Norfund and NorFinance AS — a joint venture between Norfund and Norwegian private investors — signed an agreement in January to buy half of Helios’ interest in Equity, equivalent to 12.223 per cent.

The parties did not disclose the value of the deal which is awaiting regulatory approval, but the stake is worth about Sh25 billion going by Equity’s current share price at the Nairobi bourse.

Equity Bank paid a dividend of Sh1.50 per share in the year ended December 2013, raking in Sh1.35 billion for Helios.

Assuming that Equity maintains a constant payout, Norfund stands to earn at least Sh678.8 million in dividends from its newly acquired 12.2 per cent stake.

Helios has earned a total of Sh4.75 billion in dividends from Equity Bank since it bought into the lender in 2007. The PE fund didn’t qualify for dividends in 2007 and earned Sh271 million the following year.

Helios invested Sh11 billion in Equity Bank in December 2007 in return for a 24.45 per cent stake in the mass-market lender.

The Africa-focused PE fund became the single largest shareholder of Equity after it bought 90,516,255 newly created shares at a premium price of Sh122 per share in a deal sanctioned by the Capital Markets Authority in 2007.

The strategic investor has more than quadrupled its investment in the lender courtesy of a share split of 10 shares for every one held in 2009.