(NAIROBI, KENYA) – Kenyan state parastatals have sold a combined 24.76% stake in Kenya Pipeline Company (KPC) to an unnamed foreign investor, less than eight months after spending billions of shillings to buy the shares.
A source familiar with the deal said at least eight parastatals sold their shares in the firm, which listed on the Nairobi Securities Exchange on 9th March, to a foreign institution.
The State pressured cash rich parastatals in February to buy into KPC’s initial public offering to prevent the sale from being declared invalid after wealthy investors snubbed the deal.
The National Social Security Fund (NSSF) bought shares worth KES38.5 billion ($328 million), followed by the Public Servants Pension Scheme at KES13 billion ($111 million), the County Workers Pension Fund at KES3.6 billion ($30.7 million) and the Unclaimed Financial Assets Authority at KES3.2 billion ($27.3 million).
Pension funds for Kenya Power, KPC and Kenya Ports Authority workers also took part heavily in the offer.
About 13 parastatals spent KES64.23 billion ($548 million) on the KPC IPO, taking a 38.35% stake in the firm.
The NSSF holds an estimated 23.3% stake in KPC, the Public Servants Pension Scheme 7.94%, the County Workers Pension Fund 2.2% and the Unclaimed Financial Assets Authority 1.98%.
The IPO needed to raise at least KES53.1 billion ($453 million) from more than 250 investors to proceed, a target that had not been met as the offer neared its close.
This forced the State to urge parastatals, the State backed pension scheme and the Ugandan government to save the IPO from collapse.
At KES9.02, the State owned firms sold the shares at nearly the same offer price as KPC’s listing on the Nairobi bourse.
The government priced the KPC IPO at KES9 per share for the offer that opened on 19th January and ran until 24th February, with the shares starting trading on 9th March.
In the end, Uganda, together with 13 State backed pension schemes and agencies, put in KES95.8 billion ($817 million) of the required KES106.3 billion ($907 million), according to confidential documents seen by the Business Daily.
The offer was 105.7% subscribed, raising KES112 billion ($955 million) against the State target of KES106 billion ($904 million).
Without the NSSF, Uganda and the pension fund, the IPO would have collapsed after failing to hit the success level.
About 90% of KPC’s top owners bought their shares through proxies during the IPO, keeping the identity of the investors hidden.
Regulatory filings show that 18 of KPC’s top 20 shareholders are under nominee accounts.
Nominee accounts are registered to hold shares on behalf of the true owners, a structure used globally and at firms listed on the Nairobi bourse to hide the identity of beneficial owners.
The NSSF and the State agencies also split their stake across several nominee accounts, masking their position as KPC’s largest shareholders.
The success of the offer was weakened by apathy among foreigners, wealthy private sector investors, retail investors and oil marketers, many of whom were believed to see Kenya Pipeline as a strategic investment.
Local retail investors bought shares worth KES4.1 billion ($35 million) against their allocation of KES21.2 billion ($181 million) in stock, while foreigners spent just KES32.7 million ($279,000) compared with their target of KES21.2 billion ($181 million).
Oil marketers took shares worth KES22.9 million ($195,000), or 0.14%, of the KES15.9 billion ($136 million) in stock allocated to dealers who rely on the pipeline to feed the market.
The concentration of local institutional investors and Uganda suggested the IPO was seen as a long term strategic investment.
The KPC transaction follows a series of large block trades at the NSE as the bourse seeks to deepen liquidity and improve transparency around big share transfers.
The most notable was the KES204.3 billion ($1.7 billion) sale of a 15% stake in Safaricom by the government to Vodacom, involving 6.009 billion shares.
It was the largest single transaction ever conducted on the bourse and accounted for the bulk of equity market turnover around the time it was executed.
Diageo has also used the block trade mechanism to raise its stake in East African Breweries (EABL), acquiring 14.97% of the brewer for KES22.73 billion ($194 million) in 2023 and lifting its total holding to 65%.
KPC’s net profit grew 13% to KES11.58 billion ($98.8 million) in the year to June 2026, allowing the firm to pay KES5.81 billion ($49.6 million) in dividends.
President William Ruto on Tuesday praised the transfer of the 4.5 billion KPC shares through the Nairobi bourse as a sign of confidence in Kenya’s capital markets.
“In demonstration of growing confidence, private investors acquired 25% stake in Kenya Pipeline Company from public entities,” President Ruto said in his Mashujaa Day address, without naming the parastatals.