NSSF Sells Sh837 million KCB Shares in Rare Move

In the fourth quarter of 2017, the National Social Security Fund (NSSF) sold shares in listed tier-one lender KCB Group for Sh837.2 million, reversing some recent stock accumulation.

According to KCB’s disclosures, the State-owned pension fund sold 21.63 million shares over the course of three months, reducing its ownership of the lender from 9.07 percent at the end of September to 8.39 percent in December.

By Tuesday’s closing price, the fund’s position of KCB shares had decreased to 269.7 million units worth of Sh10.44 billion.

The fourth quarter sale followed a period of incremental purchases that increased the NSSF’s stake from 6.12 percent in March 2019 to nine percent.

In addition to the share purchases made at the market, the NSSF’s former ownership of the National Bank of Kenya (NBK) has been converted into shares of the nation’s second-largest lender as a result of KCB’s recent acquisition of the smaller bank, increasing the holding in KCB.

The documents demonstrate that local, institutional, and individual investors were the primary purchasers of the shares sold by NSSF.

Local institutional investors now hold 1.446 billion shares of KCB, or a holding of 45.01 percent, up 5.35 million from the previous quarter.

Following the acquisition of an additional 4.82 million shares, local retail investors now own 847.4 million shares, or 26.37 percent of the institution.

With a 19.76 percent holding, or 635 million shares, in the bank, the National Treasury is still the sole largest stakeholder.

NSSF has been slowly growing its exposure to significant blue chips at the Nairobi Securities Exchange (NSE), aside from the unusual KCB transaction, in order to augment investment income from government securities with these companies’ strong fundamentals and consistent dividend payments.

The pension fund, which holds sizeable holdings in numerous companies both directly and through its designated fund managers, is the largest local institutional investor in the stock market.

Due to the substantial number of shares held in both firms, KCB and Safaricom are the pension fund’s main sources of dividend income.

According to the fund’s most recent audited financial statements, which cover the year ending in June 2021, it received dividends from KCB and Safaricom totalling Sh265.7 million and Sh337.7 million, respectively.

The decline in 2021 was brought on by several companies choosing to cut or forego dividend pay-outs in order to conserve money during the Covid-19 outbreak. A year earlier, NSSF had earned Sh773.6 million in KCB dividends and Sh962 million from Safaricom.

Following the announcement of a 21 percent increase in net earnings to Sh30.4 billion for the nine months ending in September 2022, KCB gave its shareholders an interim dividend of Sh1 per share totalling Sh267.9 million, which the NSSF has already recorded.