Helios holds on to Sh1.3bn Equity shares

Private equity firm Helios Investment Partners has re-emerged on Equity Group’s top shareholders list with a 0.87 per cent stake worth Sh1.3 billion a few weeks after the lender announced the institutional investor’s exit.

Regulatory filings show that Helios held 32.7 million shares in Equity at the end of October, indicating that the investor either retained part of its holdings or made a new investment in the country’s second largest bank.

Equity, on September 17, announced that Helios had completed the sale of its 24.9 per cent stake in the bank to a group of institutional investors for $500 million (Sh51 billion).

Helios sold its interests to Genesis (5.4 per cent), NSSF Uganda (2.44 per cent) and Norfund and Norfinance (12.2 per cent), with undisclosed stakes also bought by Investec, NSSF Kenya, African Alliance, Renaissance Capital and other investors.

READ: Helios exits Equity with sale of final stake to NSSF

The London-based PE firm sold its shares in Equity in line with its medium term investment horizon, with its residual interest likely representing the balance left after selling to the investors listed by Equity.

There have been several block trades in Equity’s shares this month and it was not immediately clear whether Helios participated in any of the large transactions.

“Those are shareholders who trade two things I don’t follow is the price of share and who is buying and selling. I don’t track the price but I can influence the share by performance,” Equity’s CEO James Mwangi said recently in response to queries from the Business Daily.

Priced at a premium

On November 5, for instance, a total of 27.6 million Equity shares were sold on the Nairobi Securities Exchange at an average price of Sh41.75 each.

Helios is listed as the ninth largest foreign investor in Equity, according to October records, with subsequent filings expected to show whether its position is ephemeral or long term.

Most of Equity’s shares sold by Helios were priced at a premium of up to 10 per cent on prevailing market prices, helping the PE firm earn one of the highest returns in the Kenyan market.

At Sh51 billion, Helios booked a capital gain of Sh40 billion on the Sh11 billion it paid in December 2007 to acquire the 24.9 per stake. The PE firm also collected dividends totalling Sh6.5 billion from Equity, taking its total return on the investment to 422 per cent or 23 per cent compounded annually.

READ: PE Helios rakes in Sh52bn from Equity stake sale

This makes it one of the highest returns earned by a PE firm in Kenya, underlining the lucrative earnings by such funds, which typically have a seven-year investment horizon.

Equity said the investors who acquired Helios’ stake have a long-term commitment and are ready to raise their stake or provide additional equity financing to further grow the bank.

Norfund, for instance, has expressed intention to double its interest in Equity to 25 per cent. The bank intends to venture into nine new African markets by 2024, a move that will raise its operations to 15 countries in Africa.

The expansion plan means the lender has to raise new capital.

Equity recently concluded the acquisition of a 79 per cent stake in ProCredit, a bank in the Democratic Republic of Congo.