We Were Mindful Of The Risks Of Investing In Umeme – NSSF

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In short
The National Social Security Fund (NSSF) has confirmed that it has invested 34 billion Uganda Shillings of member funds in Umeme to increase its shareholding from 8.11percent to 14.27percent. In a press statement confirming the purchase of shares, Geraldine Ssali Busulwa, the acting Managing Director, said that Umeme had delivered good returns for the Fund since the investment was made in 2012.

The National Social Security Fund (NSSF) has confirmed that it has invested 34 billion Uganda Shillings of member funds in Umeme to increase its shareholding from 8.11percent to 14.27percent.
 
In a press statement confirming the purchase of shares, Geraldine Ssali Busulwa, the acting Managing Director, said that Umeme had delivered good returns for the Fund since the investment was made in 2012.
 
Busulwa says Umeme is one of the best performing companies in East Africa and the second largest company on the Uganda Securities Exchange. She says that since its initial public offering (IPO), the Fund has enjoyed a 41% total return including 3 billion shillings in dividends.
 
The value of shares NSSF owns in Umeme has increased from 48 billion Uganda Shillings as of March 2014 to 78.8 billion Uganda Shillings. It also makes NSSF the third largest investor in Umeme, after Actis and Investec.
 
Busulwa however noted that NSSF was cautious of the risks surrounding Umeme. She admitted that the biggest risk to this investment was “the threat of cancellation of the concession as suggested by the report of Adhoc committee of Parliament.”
 
The Committee recommended the termination of the concession, a recommendation adopted by Members of Parliament in March 2014. The decision by parliament is however not bidding, and cabinet is yet to pronounce itself on the matter.
 
Offering some assurance, she said Government has indicated that it is not considering the Adhoc committee’s proposal. She added that the costs of immediate cancellation would be substantial to government and as such it would be untenable for government to adopt the recommendation.
 
If government were to terminate the contract, it would pay 526 billion Uganda Shillings as compensation to Umeme.
 
NSSF manages 4 trillion shillings in assets and Umeme is the only energy sector investment in Uganda where member funds are invested. Busulwa emphasized that the increased shareholding in Umeme, “fits well within NSSF’s considered approach to deploy capital in growing areas like the energy sector.”

 

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