200,000 small investors exit KenGen, Safaricom
More than 200,000 retail investors have sold their stakes in power producer KenGen and telecom firm Safaricom since the two companies went public through initial public offerings (IPO), the latest market data shows.
The divestiture is seen as resulting from a mix of profit-taking and cutting of losses in the two firms that have had mixed performance in terms of dividend yields and share price movement since their listing.
Investors initially gained a foothold in KenGen in 2006 when the government sold a 30 per cent stake in the power firm to the public – launching what became the Nairobi Securities Exchange’s (NSE) golden age.
HIGH-LEVEL SPECULATION
The popularity of stock market investing peaked two years later when the government sold 25 per cent of its shares at Safaricom to the public, attracting more than one million new investors to the Nairobi bourse.
Shareholder registers show that the companies had by November 2013 lost a fifth of the retail investors who first bought shares during the IPOs.
Share volumes held by individual investors have dropped 43 per cent in the case of KenGen and 40 per cent in Safaricom, underlining the large sell-offs.
Analysts said the reduced participation of retail investors is largely a reflection of the high-level speculation that dominated investment decisions at the time.
“Most retail investors buy to sell when prices rise. Others hold on for a few years expecting even larger gains and exit if their targets are not met,” said Paul Mwai, the chief executive of investment bank AIB Capital.
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