The National Social Security Fund (NSSF) is now cementing its position as the single largest investor in Umeme, after purchasing an additional 121million shares in the utility company for Shs59.4bn. NSSF announced today that it had reached an agreement with Actis to acquire 7.5 percent of the shares it held in Umeme.
That means NSSF’s stake will increase from 15.5 percent to 23 percent.
“Umeme Limited also enjoys attractive future prospects, making it a key holding in our equity investments portfolio. The investment also fits well with our strategy to diversify our investments portfolio, a key component of our Corporate Strategy to grow the Fund to Ushs 20 trillion by 2025,” Mr. Richard Byarugaba, the Managing Director NSSF said in a statement.
On Friday, the Uganda Securities Exchange (USE) announced that it had suspended the trading of Umeme shares to allow Actis (Umeme Holdings) negotiate a private placement for the sale of its 14.5 percent stake in Umeme. That placement allowed NSSF to negotiate a discounted price for the shares instead of paying the market price.
“At Shs488 per share, the Fund obtained a 7% discount given share price of Ushs 525 before the suspension of trading, which is Ushs 4.5 billion discount on the total transaction. This additional investment is in conformity with relevant laws and regulations, and the Fund’s own Investments Policy,” Byarugaba adds in the statement.
NSSF has been gradually increasing its stake in Umeme as it continues to generate the most returns for any of the investments the Fund has with any of the listed companies on the USE. NSSF first participated at the Initial Public Offering (IPO) in 2012 and has seen the value of its shares rise from Shs81.7bn to Shs132bn as at end of last week. NSSF is counting on the increased returns on electricity because of the projected demand and generation of power from the two dams, Isimba and Karuma.
In 2015, Umeme’s after tax rose to Shs106bn from Shs96bn in 2014.
Actis continues to also pull out of Uganda gradually. Pre-IPO in 2012, the private equity fund used to own 100 percent of Umeme. With the NSSF deal, the Actis shareholding has since shrunk to 7.5 percent.