Local retail investors, foreign investors and oil marketers shunned the Kenya Pipeline Company’s Initial Public Offer, a breakdown of the subscription has shown.
The subscription breakdown that was provided by the National Treasury has shown that the KPC IPO was headed for failure and was only salvaged by Uganda and government institutions including the National Social Security Fund (NSSF) who invested large amounts.
Local investors had been allocated a pool of stocks worth Sh21.2 billion. However, they only bought shares worth Sh4.1 billion which was equivalent to taking a stake of 2.56 percent only in the IPO.
At the same time, foreign investors had been allocated Sh21.2 billion, but they only bought shares worth Sh34.8 million. This was equivalent to a stake of 0.02 percent in the IPO.
On their part, oil marketers had an allocation of stocks worth Sh15.9 billion but only bought shares worth Sh23.1 million which was equivalent to a stake of 0.01 percent.
Local institutional investors carried the heavy load by taking in a stake of 40.99 percent followed by investors from the East African region who acquired a stake of 21.22 percent.
However, out of this 21.22 percent from East Africa, Uganda invested between Sh20 billion and Sh30 billion into the IPO for a stake of 20 percent. This means apart from Uganda, investment from the East African region was about 1 percent only.
For its investment, the neighbouring country was given huge concessions by the National Treasury after threatening to pull out of the deal at the last minute.
These included the powers to determine the hiring and firing of any KPC CEO. The government has also allowed Uganda power to approve any future issuance of shares in KPC. In addition to this, Uganda will also get two seats in the board of KPC.
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The IPO was claimed to have been overvalued with some investment firms such as Sterling Capital placing the value of the KPC shares on sale at Sh4.4 per share based on discounted cash flow model and Sh2.8 per share based on dividend discount model, and an overall fair value estimate of about Sh3.7 per share.
Had Uganda and local institutional investors pulled out, the IPO would have been declared a failure. their participation, however, uplifted the IPO to an oversubscription rate of 105 percent. The KPC shares will now start trading on the Nairobi Securities Exchange on March 9, 2026.
