State-owned firms likely to be sold to raise funds
By John Otini, October 14, 2022Kenya Electricity Generating Company (Kengen), Kenya Ports Authority and Kenya Pipeline Company are the three most likely State parastatals the government is targeting to list in order to raise funds.
Information from the Privatisation Commission indicates that the three are the only companies from the total of 26 companies slated for privatisation that are profitable.
Poor performance
The rest were supposed to be privatised due to poor performance but the first three were targets for budgetary support. According to the Commission, the companies will be privatised to achieve various objectives including raising resources for the government. “Mobilisation of resources for additional investments, enhancement of transparency and corporate governance, broadening of shareholding in the economy, development of the capital markets and raising of resources to support the government budget,” the commission said.
Other available opportunities include offloading stakes in listed firms like KCB and Safaricom which could also stir up activities at a time when the stock market is the worst performing on an index of the top 14 exchanges in Africa year to date.
The government is targeting to list at least six to 10 companies in the next 12 months as it seeks to create fiscal headroom at a time when the Treasury is facing a cash crunch.
Most of the other planned privatisations were basically of struggling sugar millers and hotels across the country that were being sold to make them competitive and hence cannot meet the criteria of helping raise funds for the government.
Others are Kenya Meat Commission, Kenya Wine Agencies, KCC, Numerical Machining Complex, ICDC and many more.
“As we prepare between six and 10 companies for listing in the stock exchange in the next 12 months, and I promise you we will deliver on that commitment, I also want to encourage the private sector as we bring 10 companies, please bring five,” Ruto said. Ruto said Tuesday his government would bring to the bourse through initial public offerings (I between six and 10 companies, urging the private sector to also list at least five companies at the NSE.
Additional shares
Listing of additional shares of State corporations will end a six-year IPO drought at the NSE that has lasted since October 2015 when the Stanlib Fahari REIT was listed.
In the interim, Bio Yoghurt and Credit Bank are some of the banks that have already received a node from the regulator to list on the bourse. The privatisation push comes days after Telkom Kenya was bought back with Sh6 billion, raising concerns over the government’s commitment to raising funds.
Treasury acquired a 60 per cent stake in Telkom from UK-based private equity fund, Helios Investment Partners, making the company fully State-owned.