The Treasury acquired an additional 13.7 million shares in KCB Group #ticker:KCB in the lender’s dividend deal last year where part of the payout was in the form of the company’s own shares.
The new shares, which have a market value of Sh468.4 million, raised the Treasury’s interest in the country’s biggest bank by assets from the previous 17.31 per cent to 17.53 per cent and cemented its position as the largest single shareholder.
The Treasury’s enlarged stake is disclosed in the lender’s latest annual report.
The government was among the few institutional investors that opted to receive half of the Sh6 billion total dividend — declared for the year ended December 2015 — in shares.
KCB offered a payout of Sh2 per share, with Sh1 per share in cash and Sh1 per share in stock at the conversion price of Sh38.
Investors had the option to reject the share allotment plan and apply for an all-cash dividend.
The Treasury and other shareholders took up a total of 40.8 million shares in what is technically known as a scrip dividend, a move that led to a 1.3 per cent dilution of those who snubbed the stock offer.
The National Social Security Fund (NSSF), the second-largest shareholder with a six per cent stake, was among investors who elected to receive their entire dividend in cash.
KCB saved Sh1.5 billion in the scrip dividend, a move that helped to boost its capital position.
The lender, however, raised its dividend payout for the year ended December 2016 to a record Sh3 per share or an aggregate of Sh9.1 billion, citing adequate cash reserves.
The Treasury’s participation in the scrip dividend signals its confidence about the lender’s future prospects.
Mombasa-based billionaire family, the Bablas, however disappeared from the list of KCB’s top shareholders after trading 47 million shares that would currently be valued at Sh1.6 billion.
The capping of interest rates starting September last year has dimmed the profitability outlook for banks that reported double digit earnings growth in previous years.