In the News:
- Kenya has launched a public offer to sell 65% of kenya pipeline company.
- The government is seeking to raise about kenya shillings 106.31 billion from the sale.
- The offer places a valuation of about kenya shillings 163.56 billion on the company.
Kenya has launched a public offer for the sale of a majority stake in Kenya pipeline company as it seeks to raise about $822 million from the capital market.
The government of Kenya is offering 11,812,644,350 ordinary shares, representing a 65% divestiture in the state owned pipeline operator.
In an information memorandum issued ahead of the offer on Monday, the government said the shares are priced at Kenya shillings 9.00 each. At that price, the transaction implies a capital raise of Kenya shillings 106.31 billion and values the company at about Kenya shillings 163.56 billion.
The offer opens on January 19 and closes on February 19. The offer period spans one month, giving investors across different categories time to participate.
Kenya pipeline company operates the country’s main petroleum products transportation and storage infrastructure. Its pipeline network supports fuel supply across Kenya and parts of the East African region.
Faida investment bank limited is acting as the lead transaction advisor for the offer.
Legal advisory services are being provided by TripleOKLaw Advocates and G&A Advocates LLP.
How the shares are being allocated
The government has distributed the offer shares across several investor groups to widen participation. Retail investors, institutional investors and regional or east African community investors have each been allocated 20% of the shares.
Oil marketing companies have been allocated 15% of the offer. The allocation reflects the company’s role in supporting fuel supply and distribution across the country.
The government did not disclose whether any shares would be reserved for strategic investors outside these categories. Applications will be processed strictly within the stated allocation framework.
How the offer price was determined
The information memorandum explained that the offer price was set using an earnings based valuation approach. The government said the offer price was based on the company’s earnings, rather than its physical assets.
“The earnings profile reflects the company’s capacity to generate distributable returns to shareholders,” the memorandum said.
The government explained that the pricing focused on earnings and dividend potential, which aligns with how investors on the Nairobi securities exchange assess infrastructure companies.
Asset based and income based methods were used as cross checks to ensure the valuation remains reasonable for investors assessing future profitability.
The offer forms part of the government’s broader plan to raise capital from state assets while widening public participation in the local market.
