CMA opens window for retailers to buy Umeme shares

Umeme technicians repair power lines in Kampala. Actis has 60.08 per cent shareholding in the Ugandan electricity vendor. Photo/FILE

The Capital Markets Authority (CMA) has lifted the suspension of Uganda electricity distributor Umeme from trading to allow retail investors buy some of the shares on sale by private equity (PE) firm Actis.

The UK PE firm is the majority shareholder in Umeme with a 60.08 per cent shareholding through its subsidiary Umeme Holdings and is selling a significant stake to select investors through private placement.

Umeme had said in a statement that the suspension was to allow settlement with investors who would participate in the private placement, but brokers notified clients that there were some Sh436 million worth of shares on offer to retail investors in the region.

“This is to inform you that part of Umeme Limited major shareholder’s (Umeme Holdings Limited) shares will be on offer for East African retail individual clients.

‘‘The $5 million worth offer opens tomorrow, the 13th May 2014 and will close on 30th May 2014” said an email to clients by Crested Stocks and Securities Ltd of Uganda.

‘‘As a result, the voluntary suspension of Umeme will be lifted as at 10 am tomorrow, 13th May 2014.”

Umeme is cross-listed on the Ugandan Securities Exchange and the Nairobi Securities Exchange. The shares are being sold at USh340 (Sh11.79), a 5.6 per cent discount from the USh360 (Sh12.48) market price.

Investors will also be restricted to buying a minimum of 1,000 shares and a maximum of 200,000 while companies will not participate in the offer.

“This offer is open to only East African retail clients (individuals only). Any companies and foreign investors are not eligible,” added the email.

Actis is selling a stake in the utility company for the second time in less than two years. It first invested in Umeme in 2005.

The first sale was during the November 2012 initial public offer (IPO).

At the time the firm offloaded a 39.92 per cent stake on USE. The shares were cross-listed on the NSE a month later.

Actis typically invests in growth firms and exits after a few years. In Kenya it has invested in real estate, energy and the services sector.

Its latest investment was a 36 per cent purchase in AutoXpress in February, a company that sells and services car tyres, wheels, batteries and suspension parts.

Other investments include the $250 million (Sh22 billion) Garden City Mall which on completion will be the largest shopping mall in East and Central Africa.

The firm is developing the second phase of the Nairobi Business Park consisting of commercial office space.

In the energy sector, the private equity fund is a majority shareholder in Tsavo Power, a 74-megawatt diesel-fired plant in Mombasa.

PE firms have minted billions of shillings in Kenya through investing in fledgling firms and exiting on maturity of investment upon which they go for the next promising investment.

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