NSSF Injects Shs 59bn in Umeme; Increases Stake to 23%

NSSF MD Richard Byarugaba

The National Social Security Fund (NSSF) has bought more shares in power distributor Umeme, this site increasing its stake to 23 percent.

NSSF boss Richard Byarugaba said Monday the Fund’s decision was in line with “our statutory mandate to judiciously invest NSSF members’ savings, and our Investments Strategy.”

He said the Fund has reached an agreement to buy 121,820,850 shares of Umeme Limited from Umeme Holdings Limited at a price of Ushs 488 per share.

“This is an additional investment of about Ushs 59.4 billion in Umeme Limited. It effectively increases the Fund`s total stake in the company from 15.5 percent (251,951,071 shares) to 23 percent (373,771,921 shares),” said Byarugaba.

The development came just before Umeme suspended trading of its shares on the stock exchange.

“In line with its obligations under the Uganda Securities Exchange Listing Rules, 2003, Umeme Limited (the “Company”) informs the public that Umeme Holdings Limited is currently contemplating a sale of its shares in the Company,” Uganda Stock Exchange (USE) said in a statement this past Friday.

It was reported that Umeme intended to sell a significant stake of its shares to a wealthy Middle East-based Fund known as Egypt Kuwait Holding Company (EKHC).

Byarugaba said at Ushs 488 per share, the Fund obtained a 7 percent discount given share price of Ushs 525 before suspension of trading, which is Ushs 4.5 billion discount on the total transaction.

Power tariffs

“It also fits well within our plan to deploy capital in growing areas like the energy sector. Uganda still has one of the lowest electricity consumption per capita levels in the world, with only an estimated 15 percent of the population having access to electricity,” said Byarugaba.

“Umeme Limited also plays a critical role in enabling economic growth and development of Uganda through facilitating access to electricity. The ever increasing demand for electricity should lead to higher earnings for the company, and in turn a good yield on the Fund’s investment,” he added.

President Museveni has previously vowed to bring down power tariffs which are a hindrance to growth of the manufacturing sector.

“The only problem remaining is on account of the high electricity prices caused by the Bujagali power station of 11 American cents.  The power from Nalubaale is US 3 cents because we have finished paying the loans,” said Museveni at a recent function.

The President argued that by a number of measures, the cost of Bujagali electricity can go down to US 7 cents and that thereafter, Uganda can undertake further measures that can lower it further to US 5 cents for, at least, the manufacturers.

“In a manufactured product, electricity accounts for 40 percent and transport accounts for 50 percent (World Bank). Once, therefore, you tackle these two (electricity and transport), you significantly lower the costs of doing business in any given economy,” said the president.

Byarugaba said this additional investment in Umeme Limited confirms the Fund`s commitment to invest in the Ugandan economy.

“We will also continue to seek viable investment opportunities within the larger East African region to enable us pay a reasonable return to our members,” he added.

NSSF’s investment in Umeme Limited since it listed on the Uganda Securities Exchange has delivered impressive returns to the Fund.

To date, the Fund has earned Ushs 22.27 billion in dividends since 2012 and also enjoyed a holding period return of 89 percent since the IPO in 2012.

Byarugaba said the Fund’s investment cost before this transaction since the IPO in Umeme Limited is Ushs 81.7 billion.

“The total value of the investment is now worth over Ushs.132.3 billion, based on the share price before suspension of trading,” he added.


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