NSSF promises good interest

By David Mugabe

The sh1.97 billion dividend cheque issued by Umeme to the National Social Security Fund (NSSF) Wednesday will come as good news to NSSF contributors who have been skeptical about the worth of the investment following several reports of an "ill-advised transaction."

Richard Byarugaba received the dummy cheque and promised that the fund will pay "at least 10% or even better in interest like we did last year."

Byarugaba described the sh36b investments in Umeme's initial public offer (IPO) as a good deal and that due diligence had been undertaken while the necessary approvals were sought and approved.

"It has provided double digit return and it is impressive anywhere in the world," said Richard Byarugaba. It is the single highest dividend the fund has received from a single equity investment in the last three years.

NSSF which is the biggest player on the stock market is also a big investor in Stanbic bank that todate remains one of the most liquid companies on the Uganda Securities Exchange. Umeme declared a dividend of sh15 per share during its annual general meeting in April.

Umeme's share price has appreciated from its IPO price of sh275 closing at a weighted average price of sh360 at yesterday's trading session.

NSSF's total holding in Umeme as at June 30, 2013 is over 131 million shares which is an equivalent to 8.1% of the total number of shares issued by the company and 20.3% of the shares available for trading.

On whether the Fund shall hold onto the Umeme shares, Byarugaba said the Fund would maintain its long term approach.

"Occasionally we will look at our portfolio and may want to realize some gain so we review, it goes through our business cycles," said Byarugaba.

Sam Zimbe, Umeme general manager corporate and regulatory said in the last three months, Umeme has registered the highest volumes at the Uganda Securities Exchange while they have also paid sh2.6 billion to Uganda Revenue Authority as withholding tax.

Umeme's net profit grew by 148% to sh57b from sh23b in the last year.

Byarugaba also called for quicker reforms to allow the fund take advantage of investments opportunities in the region because of limited options in Uganda.

The Fund invests in fixed assets (government securities), real estate and equity although the new regulator that came on board a few months ago is coming up with new investment guidelines on which asset classes funds can invest in.