Safaricom spins off two arms for startup investment

One of the subsidiary will invest in seed-stage startups in Kenya. The firm will be complemented by Spark Fund, which Safaricom launched back in 2014.
Safaricom
From left, Chief Finance Officer, Dilip Pal, CEO, Safaricom PLC, Peter Ndegwa, Chairman, Safaricom PLC, Adil Arshed Khawaja (MBS) and Safaricom PLC, Company Secretary Kathryne Maundu during Safaricom’s AGM held at MJC.

A few weeks ago, we learned that Safaricom was in the process of creating two new subsidiaries. The subsidiaries were basically startup investment firms, but at that time, little was revealed about what they would do. Safaricom had also said that it was waiting for board approval to go head with the creationg of the venture firms. In an annual general meeting held yesterday, shareholders gave the telco the go-ahead, meaning that we should start seeing renewed energy regarding how Safaricom invests in startups.

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One of the subsidiary will invest in seed-stage startups in Kenya. The firm will be complemented by Spark Fund, which Safaricom launched back in 2014 with the same goals. Spark Fund was instrumental in funding startups such as Sendy, Eneza Education and iProcure.

“The incorporation of a company limited by guarantee to invest in seed stage startups, builds on the Spark Fund—an investment entity by Safaricom PLC governed by a Board of Trustees—designed to empower, and nurture seed-stage start-ups across Kenya. This new entity is expected to streamline administrative processes and enhance governance,” says Safaricom in a statement.

The other subsidiary will focus on funding established startups. According to Safaricom’s CEO Peter Ndegwa, this approach will help the telco become a ‘purpose-led technology company’ by 2025.

“The new private limited liability company will be mandated to; invest in mature, strategically aligned entities that will help accelerate Safaricom’s mission towards becoming a tech company by 2025. This entity will also act as the main investment vehicle for all strategic investments undertaken by Safaricom PLC,” reads a statement from the telco.

Mr Peter Ndegwa, Safaricom CEO, said: “We are committed to empowering the tech ecosystem in Kenya and beyond, and this strategic move will enable us to broaden our investments, embracing both seed-stage and growth-stage start-ups. Incorporating these subsidiaries is pivotal to realising Safaricom’s purpose to become a purpose-led technology company.”

Also present during the AGM was the recently appointed Safaricom board chairman Adil Khawaja, who replaced banker John Ngumi’s short stint at the telco. The chairman said, “We thank our shareholders for their unwavering support in establishing the new subsidiaries. By investing in tech entrepreneurs and initiatives that align with our strategic mission, we aim to continue to transform lives by connecting people, opportunities, and information while driving innovation, creating value, and leaving a lasting impact on society.”

At the Annual General Meeting (AGM), shareholders also approved a final dividend of KES 0.62 per ordinary share. This will result in a total dividend payout of KES 24.84 billion. Before this, in February 2023, the Board had sanctioned an interim dividend of KES 0.58 per ordinary share, leading to a total payout of KES 23.24 billion for shareholders. These dividends amount to KES 48.08 billion for the year, equivalent to KES 1.20 per share for the year ending on 31 March 2023. Eligible shareholders will receive the dividend on or about 31 August 2023, based on the Register of Members as of the close of business on 28 July 2023.

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