South Africa’s pension fund Public Investment Corporation (PIC) has signaled its confidence in Kengen by raising its stake in the power producer’s prospects to 6.62% per cent following the purchase of an additional 85.1 million shares. ,
The fund, which is set to be allotted 351.2 million KenGen shares equivalent to 5.33% equity, recently purchased the 85.1 million shares amounting to a 1.29% stake in the open market.
PIC has been buying KenGen shares in batches; it first purchased 72.9 million units and followed it up with 12.2 million units early last month.
“With the additional shares bought from the market, PIC’s total holding on allotment, assuming all else equal would be 436.3 million shares equivalent to 6.62% shareholding,” the Nairobi Securities Exchange-listed firm said in a statement.
The South African fund will rise to become the second largest shareholder of KenGen after the National Treasury whose stake will stand at 70% after being diluted 5.3% alongside other investors in the recent rights issue.
The government’s ownership rose to 73.92% after a section of shareholders declined to take up 351.2 million shares in the cash call, with a decision subsequently made to sell the shares to PIC for Sh2.3 billion.
The transaction will see the company hit the target of raising a total of Sh28.7 billion, having netted Sh26.4 billion in the cash call.
KenGen is raising cash to boost its financial position at a time when it has lined up more capital-intensive power projects.
The company says the projects will cost nearly $1 billion (Sh103 billion) in aggregate, with various funding options including debt and joint ventures being considered to raise the large sum.
The investment in KenGen underlines PIC’s strategy of diversifying outside South Africa where it is one of the biggest investors in publicly traded firms.