Kenya Pipeline Company Plc share price jumped 7.9 percent on Thursday, hitting a high of Sh9.78 from Sh9.06 at its previous closing, after the disclosure of Aliko Dangote’s acquisition of a 24.7 percent stake in the company.
The entry of the Nigerian billionaire businessman, who is expected to make fresh investments in the business, has been viewed as a vote of confidence in the mid-stream oil company, driving investors’ interest in the counter.
Interest in KPC has also been drawn from the revelation that Dangote snatched the significant stake in the business from overseas suitors from the United Kingdom and the Middle East which underlines the intrinsic value of the firm.
KPC’s share price however remains below its all-time share price of Sh10.
‘This is a vote of confidence. Dangote has raised the profile of KPC,’ said a market analyst.
‘Without this transaction, we would not have seen this price rally.’
Dangote acquired the 24.7 percent stake in KPC through the purchase of 4.5 billion shares from local institutional investors including the National Social Security Fund (NSSF), the Public Service Superannuation Fund (PSSF) and the County Pension Fund (CPF).
The shares changed hands for Sh9.36 each which rounds off to about Sh42.1 billion, with the trade being concluded through the Nairobi Securities Exchange (NSE) block board.
The sale price did not form part of KPC’s closing share price of Sh9.02 on Monday as per rules set by the bourse.
Aliko Dangote is seen as a strategic investor in KPC and is expected to align the operations of the pipeline company with his endeavour to build an oil refinery in the port of Lamu.
KPC’s existing and future network is seen as essential in the supply and distribution of finished petroleum products from the Lamu refinery which construction is set for completion by 2030.
The Kenya Pipeline Company has been looking for a strategic investor even after its public listing in March this year.
The initial public offer period was deemed as insufficient in bringing in an anchor investor.
KPC now has three major shareholders including the government of Kenya which retained a 35 percent stake in the business, Dangote, and the Uganda National Oil Corporation (UNOC) who both hold stakes of more than 20 percent in the business.
Other shareholders including local pension institutions have become minority shareholders after selling down/reducing their stakes in the company.