Foreign investors have taken advantage of the removal of caps on shareholding for overseas investors to increase the foreign stake beyond the pre-2016 legal maximum of 75 per cent.
Data compiled by the Capital Markets Authority (CMA) shows BOC Kenya, Stanbic Holdings, Scangroup and Standard Chartered Bank #ticker:SCBK have all seen an increase in the stake held by foreigners beyond the 75 per cent former cap as at the end of last month compared to June 2015.
Other companies that previously breached the 75 per cent limit, including Total Kenya and British American Tobacco #ticker:BAT, are now not required to make any changes in shareholding. This is unlike in 2015 when the CMA committed to make a closer scrutiny of shareholding in listed companies in a bid to keep the foreign stake at no more than the then legal maximum of 75 per cent. New Gold Kenya ETF that was launched last year is currently 97.6 per cent foreign owned. The change was made in late 2015 after a proposal in the 2015/16 Budget allowing foreigners to take up to a 100 per cent of a listed company. The Treasury’s rationale was that this would encourage more robust trading on the exchange and also attract foreign investments.
“The change in the law has had some impact on the trading by foreign investors on the NSE. But it has not been the only factor because foreigners were already very interested in the market, only that the law prevented them to some extent. Generally, the change has been positive from a market perspective,” said Eric Musau, head of research at Nairobi-based Standard Investment Bank.