Proparco has sold 1.3 million shares in the Kenyan commercial bank, the sale totalling 1.8 billion Kenyan Shillings ($20.6 million); while DEG will make a similar sale by March – making a combined share sale valued at 3.6 billion Kenyan Shillings ($41 million).
The development finance institutions are selling their respective shareholdings to existing stakeholders of the bank.
The two European development financiers will now see their combined ownership in I&M drop to 10.68 per cent – down from a combined holding of 19.77 percent. The two companies have seen a return on their shareholding of 125 per cent since buying into the bank in 2007.
It is thought that the pair timed the sale to before the I&M listing on the NSE – which shareholders will be asked to approve on February 20 – due to a lock-in policy usually enforced by the Capital Markets Authority preventing the sale of more than 50 per cent of a stake by any top shareholder of a company in the two years following the company’s listing, in order to provide stability and security for minor shareholders.
The lock-in would mean that Proparco could only sell 1.28 million shares in the two years following listing, while DEG could only sell 1.5 million shares given their status as top stakeholders.
By making the sales prior to the listing, the companies have given up their positions as key shareholders, and are now free to exit the company entirely should they so wish, at any point in the future even if the listing goes ahead.
“The lock-in period is most definitely a factor in the share sale by DEG and Proparco,” a source told Business Daily.