The News:
- FMR LLC, a major investor in Safaricom, has disposed KES 600m worth of stocks in Safaricom.
- The investment firm has decried the delay in issuance of dividends, amidst the telco’s valuation.
In a significant move impacting Safaricom, one of Kenya’s top telecom companies, FMR LLC, a major American investor, has reduced its stake by two-thirds. The divestment follows delays in dividend repatriation, with FMR decreasing its Safaricom shares from 921.1 million in September 2022 to approximately 314 million. This decision was fueled by challenges in receiving dividends due to dollar scarcity in the Kenyan market.
Safaricom recently announced an interim dividend of KSh 0.55 per share in February 2024, lower than the previous year. FMR initiated the sell-off in the fourth quarter of 2022, selling 92.5 million shares in December, constituting 61.3% of the total traded shares. This led to a 55% drop in Safaricom’s valuation from KSh 1.19 trillion to KSh 532.9 billion.
FMR’s actions are part of a broader trend, as other US investors like Harding Loevner LP, Nikko Asset Management Americas, and Wellington Management have also divested some Safaricom shares. This divestment trend is raising concerns about the potential exit of top investors from Safaricom, often considered a “jewel in the crown” for investors in corporate Kenya.
Safaricom’s share price, which declined from KSh 29.82 in September 2022 to KSh 13.30, has been influenced by increased shares available for sale, exceeding demand. The delayed dividend repatriation issue is corroborated by statements from Safaricom CEO Peter Ndegwa, reporting delays of up to four months. Despite the challenges, Safaricom remains a significant player in Kenya’s telecom industry, contributing 14% of the country’s electricity through the state-owned Kenya Power grid.
