Treasury invested Sh262m in Stanlib I-Reit Stanlib Fahari

Stanlib Fahari I-Reit chief executive Anton Borkum. PHOTO | FILE 

By VICTOR JUMA, vjuma@ke.nationmedia.com

In Summary

• Treasury bought 6.5 million units of the Stanlib I-Reit, with a similar number of shares also purchased by the Investor Compensation Fund Board — a State agency that is managed by the CMA.
• The government’s participation in the offer marks a rare investment in a private entity.
• The State has in recent years significantly reduced its shareholding in a number of companies including KCB Group and Safaricom.

The Treasury invested an estimated Sh262 million of taxpayers’ cash in the real estate investment trust (I-Reit) listed on the NSE by Stanlib in December, regulatory filings have shown.

The investment in the privately-owned real estate company, which is equivalent to a 7.2 per cent stake ownership, was made at a time when the Treasury has emphasised the need to divest from State-owned terming them a drain on the ex-chequer.

Regulatory filings show that the Treasury bought 6.5 million units of the Stanlib I-Reit, with a similar number of shares also purchased by the Investor Compensation Fund Board — a State agency that is managed by the Capital Markets Authority (CMA).

The units were bought at the offer price of Sh20 each ahead of the Nairobi Securities Exchange (NSE) listing that saw Stanlib receive a total of Sh3.6 billion from the public against an initial target of up to Sh12.5 billion.

“They (government) bought on the same terms with everyone else in the initial offer,” said Anton Borkum, the CEO of the I-Reit dubbed Fahari.

The I-Reit is currently priced at Sh20 apiece at the NSE, having dropped slightly below its initial public offering price in recent weeks.

Treasury secretary Henry Rotich could not be reached for comment by the time of going to press.

The government’s participation in the offer marks a rare investment in a private entity. The State has in recent years significantly reduced its shareholding in a number of companies including KCB Group and Safaricom.

It also comes at a time when several State-owned firms continue to wait for fresh funding from the government to pay debt and fuel their expansion.

READ: Stanlib finalises Donholm's Greenspan Mall purchase

National carrier Kenya Airways, for instance, is yet to receive sums that analysts estimated could add up to Sh100 billion to help turn around the airline.

The national carrier is currently operating on the goodwill of creditors whom it owes Sh33.9 billion.

National Bank of Kenya (NBK) has also seen its rights issue delayed for years as the Treasury failed to commit itself in a proposed cash call as one of the major shareholders alongside the National Social Security Fund (NSSF).

The bank intends to float the rights issue to redeem the preference shares held by NSSF and the Treasury besides boosting its capital ratios that have been constrained, slowing down its lending business.

The government’s investment in the Fahari I-Reit reaffirms its old relationship with Stanblib’s South Africa-based parent Standard Bank.  
The Treasury has been a long-term investor in CfC Stanbic Holdings, a local subsidiary of Standard Bank.