US investor reduces its 921.1 million shares in Safaricom by two-thirds

March 4, 2024
2 min read
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  • One of the top five investors in Kenya's Safaricom, FMR LLC, an American multinational financial services firm, is selling off millions of shares in Safaricom. 
  • This move comes after a delay in dividend repatriation, causing FMR to reduce its stake in Safaricom from 921.1 million shares in September 2022 to around 314 million, according to BusinessDaily.
  • However, Safaricom announced the payment of a KSh 0.55 ($0.0038) interim dividend per share in February 2024. The payout drops from Sh0.58 ($0.0040) per share and marks the second consecutive year Safaricom is doing so.

“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 FMR sell-off reportedly began in the fourth quarter of 2022, as the company experienced delays in receiving dividends due to dollar scarcity in the Kenyan market.

According to the report, FMR's decision on Safaricom stems primarily from a delay in repatriating dividends, which violated an internal requirement for the firm, as it would for other foreign investors.

"It can be disastrous for foreign investors, typically pensions, endowments, and asset managers with regular distribution obligations, not to receive scheduled dividends and sale proceeds, and it is normally a significant red flag that leads foreign investors to withdraw."

In December, FMR, trading as Fidelity Institutional Asset Management, sold 92.5 million shares, accounting for 61.3% of Safaricom's 150.99 million shares traded at the time. Safaricom's share price fell from KSh 29.82 ($0.21) in September 2022 to KSh 13.30 ($0.092), resulting in a 55% drop in the telco's valuation from KSh 1.19 trillion to KSh 532.9 billion.

Meanwhile, FMR is not the only international shareholder selling off its Safaricom shares; Harding Loevner LP, Nikko Asset Management Americas, and Wellington Management, all US investors, have reportedly sold some of their shares.

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