Dangote says his group bought about a quarter of Kenya Pipeline Company, a 24.76% stake worth KSh 42.5 billion

Nigerian billionaire Aliko Dangote said on 21 October that his group has bought about a quarter of Kenya Pipeline Company (KPC), the Nairobi Securities Exchange-listed fuel pipeline operator. The stake is 24.76 per cent, worth about KSh 42.5 billion.

Dangote spoke at the Financial Times Africa Summit in London. "We bought 25 per cent of their pipeline network for the distribution of petroleum products," he said, according to Kenyans.co.ke. He did not say which company in his group made the purchase.

The shares changed hands on 19 October, when 4.5 billion KPC shares worth about KSh 42.5 billion moved through the NSE's block board, the exchange's facility for large trades. The buyer was a client fronted by KCB Capital, and Rock Investment Bank was the selling broker. The stake sat just under the 25 per cent level that would have required approval from the Capital Markets Authority.

Nigeria's Vanguard newspaper put the price at about US$327 million.

The sellers were state-owned institutions. At least eight parastatals sold, including the National Social Security Fund, the Public Servants Pension Scheme, the County Workers Pension Fund and the Unclaimed Financial Assets Authority. About 13 parastatals took 38.35 per cent of KPC in the initial public offering (IPO); their combined stake is now below 15 per cent.

On 20 October, President William Ruto said private investors had bought a 25 per cent stake in the pipeline network from public entities. He did not name the buyers.

The sale came less than eight months after KPC listed. The government sold 65 per cent of the company at KSh 9 a share in an IPO that ran from 19 January to 24 February, and KPC began trading on the NSE in March. The state-owned sellers received KSh 9.02 a share, close to the IPO price.

Dangote is now KPC's second-largest shareholder after the Kenyan government. The Ugandan government holds 20 per cent. Business Daily estimates that the stake would earn him about KSh 1.44 billion in dividends on KPC's proposed payout of KSh 0.32 a share, and that he may gain board seats.

Dangote also said on 21 October that he plans to invest US$1.5 billion, or KSh 195 billion, to expand KPC's pipeline network.

The purchase follows the 30 September groundbreaking of Dangote's planned refinery at Lamu Port, which is designed to process 700,000 barrels of crude oil a day. Dangote and Ruto launched the project together. Business Daily says the stake could give him influence over infrastructure that could carry fuel from that refinery.

An unnamed insider who helped put together the deal said Dangote moved quickly, as quoted by Business Daily: "When presented with the opportunity, he jumped at it, without long stories on due diligence, agreements, etc."