Business
NSSF buys 100 million Umeme shares for sh34b
Publish Date: May 24, 2014
NSSF buys 100 million Umeme shares for sh34b
A technician connecting power. Increased demand for power should translate into higher earnings growth for Umeme
  • mail
  • img
newvision

By Vision Reporter

The National Social Security Fund (NSSF) spent sh34b to purchase an additional 100 million Umeme shares, making the fund the third largest institutional investors in the power distribution company.

“As a result, the fund increased its shareholding in Umeme Ltd. from 131,722,711 shares (8.1%) to 231,722,771 shares (14.27%), Geraldine Busuulwa, the NSSF acting managing directors, said yesterday.

UK’s Investec Asset Management became the second largest shareholder in Umeme after buying 300,000,000 shares to own 18.47% interest in the electricity distribution business.

Umeme Holdings Ltd. remains the largest shareholder, although its shares reduced to 341,426,701 from the previously held shares of 975,653,505, owning 21.03%.

NSSF yesterday defended its decision to buy more shares in Umeme, saying the power distribution company “is one of the best performing companies in East Africa and the second largest company on the Uganda Securities Exchange (USE).

Busuulwa explained that since Umeme’s initial public offer, NSSF has enjoyed a 41% total return, including sh3b in dividends.

“The investment fits well within our considered approach to deploy capital in growing areas such as the energy sector,” she said in a statement.

Uganda has one of the lowest electricity consumptions per capita levels in the world, with only estimated 12% of the population access to electricity.

Busuulwa said Umeme plays a critical role in supporting economic growth of Uganda through enabling access to electricity.

“Going forward, increased demand for electricity to support the growing economy should translate into higher earnings growth for the company,” she forecast.

However, NSSF acknowledged the potential risks of its investment arising from the threat of cancellation of the Umeme Ltd. concession as recommended by the parliamentary adhoc committee on energy.

“We also believe that the costs of immediate cancellation would be substantial to the Government and as such it would be untenable to adopt the recommendation,” Busuulwa observed.

“The fund makes investment decisions in the best interest of the members and this decision to invest in Umeme is no exception. Investing in Umeme offers a chance to the fund’s registered members to own part of a company that offers good returns going forward.”

The other likely risk the fund should watch is government refusal to renew the Umeme concession when it expires.

However, Busulwa said, “assumption has been incorporated in our valuations and as such have been priced.”

She said investment in Umeme was approved by the relevant authorities, including the fund’s management investment committee, the board, Solicitor General and the Minister of Finance.


Also related to this story

Umeme wants to increase power prices

MPs vote to terminate Umeme, Eskom contracts

Umeme shares suspension lifted

Umeme should sensitize Ugandans about prepaid billing system

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
Mutebile roots for corporate governance
THE Bank of Uganda governor, Emmanuel Mutebile, has called for improvement in corporate governance for the country to meet growth targets...
Govt seeks approval for sh1.3 trillion loan
THE Government is seeking Parliament’s approval to receive $483m (sh1.39 trillion) from the Exim Bank of China...
Fastjet starts Entebbe flights
Fastjet, one of Africa’s burgeoning budget airlines has started flights from Entebbe International Airport to Dar es Salaam’s Julius Nyerere International Airport....
USAID funds coffee policy
Efforts to implement the national coffee policy got ‘a shot in the arm’ after the United States Agency for International Development (USAID) earmarked about sh1.3b to promote development in the coffee sector. The policy is expected to rejuvenate Uganda’s coffee sector....
Uganda losing sh497 trillion in unprocessed exports
ACCORDING to trade minister Amelia Kyambadde, Uganda lost as much as $128.45m (sh373b) in 2012 in exporting goods that were not processed, packaged or branded to the UK....
Tonnes of immature fish impounded in Amolatar
A combined force of the Police and regional fisheries law enforcers mounted a surprise night operation in Amolatar district, impounding tonnes of immature smoked fish...
Is KCCA doing enough to curb poor hygeine?
Yes
No
Can't Say
follow us
subscribe to our news letter