Umeme Shares Resume Trading on Stock Market

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In short
Since Umeme dominates over 70 percent of trading on the stock market, the resumption of trading means there is a likelihood there would be a rush for the shares shooting the price higher. If that happens, NSSF would literally make instant sizeable return on each of the shares acquired.

Shares of utility firm Umeme Limited, the most sought after on the Uganda Securities Exchange (USE), have resumed trading.
 
This follows last week's suspension of shares trading after Umeme Holdings Limited, owned by hedge fund Actis, sold its remaining 14.3 percent shares in Umeme to National Social Security Fund (NSSF) and other institutional and private investors.
 
NSSF acquired 7.5 percent of the 14.3 percent Actis remaining stake in Umeme at 59.4 billion Shillings, increasing the Fund's shareholding from 15.5 percent to 23 percent, making NSSF the majority shareholder in Umeme.
 
NSSF acquired the Actis' 121 million shares at a so-called discounted price of 458 Shillings per share, less than the per share price of 525 Shillings before trading was suspended.

Since Umeme dominates over 70 percent of trading on the stock market, the resumption of trading means there is a likelihood there would be a rush for the shares shooting the price higher.

If that happens, it would mean NSSF would literally make instant sizeable return on each of the shares acquired.

Addressing the media in Kampala, Paul Bwiso, the Chief Executive Officer of USE, said retail trading of Umeme shares will resume this Friday.
 
Celestino Babungi, the Managing Director of Umeme, said Actis was instrumental in inculcating a strong corporate governance culture in Umeme, making it robust and attractive.
 
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Babungi said Umeme has invested over 400 million dollars in capital investments like strengthening and expanding power distribution infrastructure and efficiency.
 
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Ironically, although Actis was represented at the meeting, it was instead Babungi who talked glowingly about Actis with none of the representatives talking about their journey.
 
Questions still hover over the true identity of some owners of Umeme, including the structure and those behind Actis. The structure of Actis, which traded as Umeme Holdings Limited, is as mysterious as its association with Umeme Limited, which is a publicly listed company.
 
Richard Byarugaba, the Managing Director of NSSF, said acquisition of stakes in Umeme not only makes business sense for savers but also contributes to building the country.
 
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Asked by Uganda Radio Network about possible conflict of interest in NSSF-Umeme dealings, Byarugaba denied that describing it as "bar talk".
 
NSSF acquired stakes in Equity Bank after buying shares owned by equity firm Helios which had links with Vivo Energy then headed by the late Ivan Kyayonka.
 
The transactions to acquire the Helios shares in Equity Bank started when Kyayonka, then the biggest single contributor to NSSF, was also its chair while also managing Vivo Energy. He resigned from Vivo Energy later.
 
Kyayonga also had interests in Umeme Limited. Helios also has links with Bayport Financial Services which also had or perhaps still has links with businessman Patrick Bitature, who happens to chair the Umeme Limited Board.
 
Seemingly, NSSF has been acquiring shares of particular equity firms in particular firms operating in what appears to be familiar territory to NSSF bosses.
 
Byarugaba categorically denied that there is conflict of interest, arguing that NSSF investments in Umeme have proved profitable to workers.
 
He also said the transactions followed regulations and laws laid down by the Capital Markets Authority, Uganda Retirement Benefits Regulatory Authority and NSSF's own investment policy.
 
Edwin Mucai, who represented the Managing Director of Stanbic Bank, transactional advisors to Actis, said through NSSF more Ugandans will have a piece of Umeme.
 
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On concerns about Umeme's future since its concession runs out in 10 years' time, Byarugaba said they will keep a close eye on the company and influence things through the Fund's appointed board representatives.
 
Umeme's Babungi said there is a clear exit strategy for investors in Umeme, adding that the law also provides that in the event the concession is terminated the investors are paid in full.
 
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About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."