The suspension of trading in shares of Umeme Limited (UMEM) was lifted this morning at the Uganda Securities Exchange following the exit of former majority stakeholder, Umeme Holdings Limited, a subsidiary of the UK-listed private equity investor Actis.
Umeme Holdings had a 14.3% stake in Umeme Ltd, 7.5% of which was acquired by the National Social Security Fund for Shs59.4 billion last week. The transaction increased NSSF’s stake in the company from 15.5% to 23%, making it the power utility’s biggest shareholder.
Shares in Umeme Limited were suspended on 4 November, following an application by the utility, so that Actis could exit without disrupting the company’s share price.
Selestino Babungi, the managing director Umeme Limited, said that Actis had built the company against all odds, instituting a strong management and governance structure. Actis acquired Umeme in 2005 after the utility was privatised by the government.
Babungi was speaking at a press conference to announce the lifting of the suspension at the Uganda Securities Exchange in Nakawa, Kampala.
Babungi said that Umeme has invested about $440 million in the power distribution network since 2005, and contributes close to $150 million to the economy annually. Investors’ appetite and interest in the company is still high, he said.
NSSF chief executive, Richard Byarugaba, said the Umeme story is important for the pension fund. “We joined at the IPO and as you all know, got a lot of flak for it,” Byarugaba said, adding that the utility’s performance vindicates the fund.
Byarugaba said NSSF’s investment in Umeme is for the future. The utility “enjoys attractive future prospects, making it a key holding in our equity investments portfolio,” he said. As part of its investment strategy, the fund aims to reduce its fixed income holdings – currently at 77.2% – and increase its equities portfolio to 25% from the current 5.8%.
Byarugaba added that buying into Umeme is in line with their commitment to invest in Uganda. The fund, he said, is looking to investment more in energy and infrastructure development, sectors crucial to Uganda’s growth prospects.
Byarugaba also said that NSSF is currently in talks with two smaller independent power producers with an aim of investing in the companies. The fund is probably looking at an exit strategy through the stock market, he said.
The retail opening of the shares left over from Actis’s exit will take place on Friday, Edwin Mucai, the group chief financial officer at Stanbic Bank Uganda, the transaction advisors, said. A total of $5.2 million worth of Umeme shares are available for individual investors on the Uganda Securities Exchange.
The retail opening of the shares left over from Actis’s exit will be on Friday, Edwin Mucai, the group chief financial officer at Stanbic Bank Uganda, the transaction advisors, said. Other buyers of Actis’s stake will also be revealed on Friday.
A total of $5.2 million worth of Umeme shares – 37.35 million shares in total – are available for individual investors on the Uganda Securities Exchange at a discounted price of Shs488 per share.