US investor slashes its 921.1 million shares in Safaricom by a whopping two-thirds. This decision follows a delay in dividend repatriation, prompting FMR to decrease its ownership stake in Safaricom from approximately 921.1 million shares in September 2022 to around 314 million, as reported by BusinessDaily.
US Investor Slashes Its Shares in Safaricom
Safaricom, however, declared in February 2024, an interim dividend of KSh 0.55 ($0.0038) per share, a slight reduction from the previous year’s KSh 0.58 ($0.0040) per share. This announcement marked the second consecutive year that Safaricom distributed an interim dividend.
“The Board of Safaricom PLC is pleased to announce that at its meeting that was held on 21st February 2024, it was resolved to approve the payment of an interim dividend of Kshs. 0.55 per ordinary share held amounting to Kshs. 23.03 billion for the year ending 31st March 2024,” the company stated.
The Selling Off Of FMR’s Shares
The selling off of FMR’s shares reportedly commenced in the fourth quarter of 2022, triggered by delays in receiving dividends attributed to dollar scarcity in the Kenyan market. According to reports, FMR’s decision to divest from Safaricom primarily resulted from the delay in repatriating dividends, contravening an internal requirement for the firm, as it would for other foreign investors.
“For foreign investors, typically pensions, endowments, and asset managers with regular distribution obligations, not receiving scheduled dividends and sale proceeds can be disastrous, and it is normally a significant red flag that leads foreign investors to withdraw,” an industry expert noted.
Fidelity Institutional Asset Management Offloading 92.5 Million Shares
In December, FMR, operating as Fidelity Institutional Asset Management, offloaded 92.5 million shares, representing 61.3% of Safaricom’s 150.99 million shares traded at the time. This divestment coincided with Safaricom’s share price decline from KSh 29.82 ($0.21) in September 2022 to KSh 13.30 ($0.092), resulting in a 55% decrease in the telco’s valuation from KSh 1.19 trillion to KSh 532.9 billion.
Other International Shareholders Divesting Its Safaricom Holdings
Furthermore, FMR is not the sole international shareholder divesting its Safaricom holdings; US investors such as Harding Loevner LP, Nikko Asset Management Americas, and Wellington Management have also purportedly sold some of their shares.
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