The National Social Security Fund (NSSF) invested nearly a quarter of its equities portfolio in Safaricom in the year ended June 2018, raising the portion from 14.8 percent the year before.
This makes the telco, which dominates at the Nairobi Securities Exchange (NSE) in terms of profitability, liquidity and market capitalisation, by far the single largest equities investment for the State-controlled pension fund.
Disclosures by the institutional investor in the latest Kenya Gazette show that it held Safaricom shares with a market value of Sh15.8 billion in the review period when its total stocks portfolio stood at Sh65.3 billion.
The NSSF investment in the telco in the prior year stood at Sh7.9 billion against the total equities pool of Sh53.5 billion.
The disclosures also show that Kenyan listed banks accounted for 34.3 percent of NSSF’s equities holdings.
The fund held bank stocks including KCB, Equity, Co-op and Barclays worth Sh22.4 billion in the review period, up from Sh17.5 billion a year earlier.
This means that the fund is heavily exposed to Safaricom and the banks, which together account for 58.4 percent of its listed stocks assets.
Analysts say the NSSF’s investment spread is typical of other fund managers’ asset allocation and reflects limited sectoral diversification on the NSE.
“Liquidity on the NSE is skewed to Safaricom, banks and a few other large companies,” said Martin Kirimi, an analyst at Standard Investment Bank (SIB).
He added that fund managers find it easier to invest in these firms because they can absorb the large pools of capital that the institutional investors control.
The NSSF held shares worth Sh8.6 billion in KCB, making it the top bank pick ahead of Equity (Sh5.5 billion) and Co-op (Sh2.4 billion).
The pension fund also invested in companies in other sectors including Bamburi Cement (Sh10.4 billion) and East African Breweries Limited (Sh5.7 billion).