Scangroup’s #ticker:SCAN chief executive Bharat Thakrar has seen his stake in the marketing services firm rise Sh237 million in four days after the company announced it will more than quadruple its dividend payout.
The Nairobi Securities Exchange-listed firm announced on Friday that it will pay about Sh4.6 per share as special dividend once it concludes the sale of some of its subsidiaries.
The move sparked a rally in the company’s share price which has hit highs of Sh19, taking the cumulative gains over the four trading days to 37 percent as of yesterday.
Mr Bharat, whose 10.6 percent stake was valued at Sh639.1 million on the day preceding the announcement, now has his ownership quoted at about Sh876 million.
He joins a group of other individual investors, mainly owners of bank shares, who have also racked up gains running into hundreds of millions of shillings in a few weeks amid the process of repealing lending rate controls.
Mr Bharat, whose Scangroup stake has previously been valued at more than Sh1 billion, says investors are discounting the company’s fair value.
“We believe our share price is significantly undervalued,” Mr Bharat said in an interview. Scangroup’s stock price previously traded at highs of Sh70 in 2013, with the decline linked to several factors including the bear market and the company’s issuance of new shares.
The proposed special dividend of Sh4.6 per share amounts to a yield of 24.2 percent based on the current stock price. This is more than 60 percent higher than Williamson Tea Kenya which, hitherto, had the highest cash return rate of about 15 percent.
If Scangroup adds its normal dividend of Sh1 per share to the special distribution, the returns will be even higher.
Scangroup says it will pay out 40 percent of the Sh5 billion it will earn from the sale of the subsidiaries.
The deal is scheduled to be completed next year, according to the transaction timetable put out by WPP, its parent company. This means that the special dividend could be declared within the financial year ending December 2020 or later.