Actis, the pan-emerging markets private equity firm, on 16th June announced the successful conclusion of a two-part transaction that has seen the firm, through its subsidiary, Umeme Holdings Ltd (“UHL”), sell a total 45.7% of Ugandan electricity distribution company, Umeme Ltd (“Umeme”) for $98m.
The sale of shares totalling 6.7% of the company and worth US$13m to Ugandan retail investors and Umeme management and directors was the final step in the transaction, which was led by Stanbic as Lead Transaction Advisor and Stanbic and Rencap as Joint Bookrunners.
The retail and management tranche follows the $85m institutional tranche, which was heavily oversubscribed by more than 20 institutional investors in May 2014. The institutional tranche represented 39% of the company. Following this latest tranche, Actis remains the second largest shareholder in Umeme, with a 14.3% residual shareholding.
On the retail tranche, strong demand from local investors prompted UHL to release additional shares. Local investors were given the opportunity to purchase shares at the same price offered to institutional investors Ushs 340 and in addition benefited from one free share for every ten purchased. The sale was structured to ensure smaller investors were given their full allocation.
Umeme’s directors and managers invested US$6m in the share purchase and have increased their shareholding in the Company to approximately 5% from the previous 2%. In the institutional offer, Investec Asset Management increased its shareholding to 18% to become the largest shareholder, while the Ugandan National Social Security Fund became the third largest shareholder after increasing its shareholding from 8% to 14%. The overall transaction has been the largest offering of secondary stock to date on the Uganda Securities Exchange.
David Grylls, Partner at Actis, commented: “We have been delighted by the strong take-up of Umeme shares, first by heavyweight institutional investors, and now by retail investors and Umeme management and directors. Not only is this indicative of a healthy appetite for solid Ugandan companies, but also a commitment to Uganda’s powerful macroeconomic story, and can only be good for Uganda’s capital markets.”
Patrick Mweheire, Lead Transaction Advisor at Stanbic Bank, added: The Accelerated Bookbuild for Actis’ sale of a stake in Umeme was highly successful and the first of its kind. It signalled significant appetite from both institutional African investors and international investors who are keen to tap into the opportunity in these increasingly sophisticated and liquid markets, this was evident in the strong demand seen across all investor classes (including retail and management) for the transaction.
Since Actis invested in Umeme in 2005, the company has invested over US$ 224m in modernising its distribution system. By the end of 2013, Umeme had increased its customer base from 250,000 to about 584,000 customers, connecting over 50,000 power-hungry customers to its network per year. Umeme now directly employs over 1,300 staff.