Business Daily (Nairobi)
February 20, 2008
News Article By Emmanuel Were
Oil marketer Kenya Oil Company (Kenol) saw its main shareholder, Petroholding Limited, sell off part of its holding to a foreign investor in order to come in line with the required regulation and to cash in on capital gains.
According to sources who could not disclose identity of the foreign institutional investor, the investor acquired a five per cent stake at a deal worth Sh610 million with each share sold for Sh80.50, a price just shy of the 10 per cent allowable decline or increase as Kenol shares had closed Monday's trading at Sh89.
At yesterday's trading, Kenol shares bounced back by close to 10 per cent as the shares closed the day's trading at Sh88.30.
After the approval by shareholders in December last year for Kenol to acquire trading partner Kobil, the common shareholder Petroholdings Limited had its shareholding rise to 75.09 per cent which was above the Capital Market Authority cap of 75 per cent for a major shareholder, meaning that it had to sell off some of its stake.
Kenol chief executive Jacob Segman had mentioned the possibility of the two main share holders, Petroholdings Limited and its related company Wells Petroleum Holdings, scaling down their investment to comply with the CMA requirements in a circular dated November 2007, which was sent out to shareholders.
The circular contained details of the acquisition. "The majority shareholders already had identified the interested buyer," said a source close to the transaction, which was concluded during Tuesday's trading at the stock market.
According to analysts the deal suited the main shareholder, Petrolholdings limited and the foreign investor as they were able to negotiate a price outside the market and effectively settle during trading at the Nairobi Stock Exchange.
"They wanted to exit the market at a certain price in order to recoup some of the money they had invested in acquisitions" said Eric Ruenji, an analyst at Sterling securities limited adding that this was in addition to scaling down by the main shareholder.
The acquisition plans had seen Kenol and Kobil, which were two separate entities with a joint operation, undergo a regional expansion plan with the main focus in Eastern and Southern Africa as it expanded to Ethiopia, Rwanda and Zambia in addition to Kenya, Uganda and Tanzanian operation.
The purchase by the foreign investor came despite Kenol raising an alert on its earnings for the current year citing the outbreak of post election violence which hampered the distribution of their products by road transport.
Investment analysts were of the opinion that following its acquisition of trading partner Kobil, Kenol with market leadership of 23.78 per cent share of the oil industry had good prospects in the local market.
Kenol is followed closely by Kenya Shell with 21.04 per cent. Total and Chevron have 17.94 per cent and 15.26 per cent respectively.
Combined net profit announced by Kenol, reflecting also those of Kobil, were up by 35 per cent for year 2007. Similarly combined net earnings rose to Sh1.2 billion from Sh949 million.