Wednesday May 21 2014

10 companies buy into Umeme

Umeme workers inspect electricity facilities in Kampala recently.

Umeme workers inspect electricity facilities in Kampala recently. A number of companies and individuals have acquired a stake in the company. FILE PHOTO.  


Kampala- At least 10 firms have either increased or bought into Umeme shares, with the largest new buyer being Investec Asset Management, at 18.47 per cent.

Investec is one of Africa’s largest investment firms with headquarters in South Africa

National Social Security Fund remains the largest local firm to have invested into Umeme at 14.27 per cent. NSSF increased its stake from 8 per cent.

Umeme Holdings Limited, a subsidiary of Actis Capital, retained a 21.03 per cent stake that it is likely to hold for at least two years.

Mr Patrick Bitature, the Umeme board chairman, told journalist in Kampala last week that Actis Capital had accepted to hold a majority stake for at least two more years.

Announced sale
Umeme Holdings recently announced it would be selling a substantial stake of its shares in Uganda’s largest electricity distributor to willing investors.

In a statement yesterday, Ms Geraldine Ssali Busuulwa, the NSSF acting managing director, confirmed the development, saying it was done after due diligence and approval from the board.

“Pursuant of our statutory mandate to prudently invest members’ contributions, we have increased our stake in Umeme, from 8.1 per cent to 14.27 per cent,” reads the statement in part.

“In line with our transparency agenda, we would like to update members and the general public that the Fund invested Shs34b to purchase an additional 100 million shares. As a result, the Fund increased its shareholding in Umeme from 131,722,771 shares to 231,722,771.”

According to NSSF, the Umeme investment has been delivering impressive returns since it was listed on the Uganda Securities Exchange.

Umeme in 2012 listed on the USE at a share price of Shs270. However by close of business yesterday the company’s share was trading at Shs340.

NSSF, according to the statement has enjoyed a 41 per cent return on investment including a total of Shs3 billion dividend payout.

The risks
However, the statement also highlights the risks associated with Umeme, saying a decision to invest in the power company had been weighed and adapted by the board.

The biggest risk to the Fund’s investment in Umeme is the threat of cancellation of the concession as recommended by a Parliamentary report in March.

“The biggest risk to the Fund’s investment in Umeme is the threat of cancellation of the concession as suggested by the report of Adhoc committee of Parliament,” a statement signed by Ms Busuulwa said.
Umeme signed a 20-year concession that will naturally expire in 2025.

However, Parliament in March adopted a parliamentary Adhoc Committee report on energy, which recommended the termination of Umeme’s concession.

Mr Eddie Kwizera, the vice chairperson of the Parliamentary Committee on Natural Resources, said it would be better if this transaction had been done after the Executive [Cabinet] had pronounced itself on the Parliamentary recommendation that sought to terminate the Umeme concession.

Umeme Holdings Limited 21.03 per cent
Investec Asset Management 18.47 per cent
National Social Security Fund 14.27 per cent
Farallon Capital 7.82 per cent
Coronation Funds 3.68 per cent
Allan Gray Africa Funds 3.25 per cent
International Finance Corporation 2.78 per cent
Utilico Emerging Markets Ltd 2.48 per cent
Everest Capital 1.47 per cent
T. Rowe Towers 0.99 per cent
Others 23.75 per cent