The government will use Ksh 244.5 billion raised from partial sale of its equity in Safaricom Plc as seed capital for two key funds, Treasury boss John Mbadi has announced.
This follows a proposal by Vodafone Kenya Limited to acquire 15pc additional shares held by the Government of Kenya in the giant telco.
According to the cabinet secretary, the proceeds from the planned divestiture of its Safaricom shareholding will be used to capitalize the National Infrastructure Fund and the Sovereign Wealth Fund announced by President William Ruto during this year’s Mashujaa Day in Kitui County.
“The partial 15pc divestiture will generate approximately Ksh 244.5 billion in aggregate proceeds. It is important to note that this transaction has gained us a 23.6pc premium on the 6-month volume weighted average price,” said Mbadi.
In a notice to shareholders, Safaricom said the non-mandatory proposed acquisition is equivalent to 6,009,814,200 ordinary shares priced at Ksh 34 per share which values the transaction at Ksh 204.3 ($1.6b).
Should the proposals be approved by Kenyan and regional regulators, Vodafone Kenya will hold a 55pc shareholding in Safaricom up from 35pc.
“Vodacom has been a trusted partner in Safaricom’s journey from the very beginning, and we welcome their continued commitment and long-term investment in our business,” said Peter Ndegwa, Safaricom Chief Executive Officer.
As a condition for the transaction, Vodacom Group will acquire Vodafone International Holdings B.V 12.5pc stake in Vodafone Kenya resulting in Vodacom owning 100pc of Vodafone Kenya.
“Acquiring a controlling stake in Safaricom strengthens our position as a market leader, while at the same time unlocks new opportunities to drive digital and financial inclusion at scale in Kenya and Ethiopia,” said Shameel Joosub, Vodacom Group Chief Executive Officer.
Under the agreement, Vodafone Kenya will also be making an upfront payment to the GOK in lieu of future dividends on the GOK’s residual 20pc shareholding.
Mbadi said the decision to sell part of its shareholding in the telco follows rigorous analysis, independent valuation advice, and compliance with the Public Finance Management Act and other regulatory requirements.
He added that the transaction reflects the government’s commitment to mobilize non-tax revenues to fund priority projects such as roads, energy, water and airports.
“I urge Parliament to expedite the approval of the instruments required to establish the two funds, ensuring they are operational by the time the transfer occurs so Kenyans can begin enjoying the benefits immediately,” added Mbadi.
The transaction now awaits approval from regulators in Kenya, Ethiopia, South Africa, EAC and COMESA.
