• Kenya sold 65% of KPC in a $825 million local-currency IPO

• The offer was oversubscribed, driven mainly by institutional investors

• Uganda acquired a 20.15% stake, underscoring the deal’s regional weight

Kenya’s plan to partially privatize its state-owned pipeline operator has delivered a strong signal to the market: demand from institutional investors was sufficient to oversubscribe the offering, countering concerns of weak appetite during the subscription period.

The initial public offering of Kenya Pipeline Company, or KPC, was oversubscribed, driven entirely by institutional demand, according to the transaction’s lead adviser in Nairobi, speaking to Reuters on Wednesday, Feb. 25. The adviser did not disclose the level of oversubscription or the identities of the investors but confirmed notable participation from retail buyers.

The Kenyan government offered 65 percent of KPC’s capital in a bid to raise $825 million, making it the largest IPO ever conducted in East Africa in local currency terms. The subscription ran from Jan. 19 to Feb. 24 at a price of $0.07 per share. Final results are expected on March 4, ahead of the company’s listing on the Nairobi Securities Exchange.

The strong institutional uptake comes after a subscription period marked by skepticism. The extension of the sales window, conservative valuations by some banks and press reports citing investor apathy had fueled doubts about the deal’s success.

The structure of the offer reflects a political effort to spread ownership across multiple constituencies. Fifteen percent of shares were reserved for oil marketing companies and 5 percent for employees. The remaining shares were divided equally among local retail investors, local institutional investors, regional East African investors and foreign investors. The state will retain a 35 percent stake and receive the full proceeds of the sale.

A Cornerstone of Kenya’s Economic Strategy

The KPC listing forms part of President William Ruto’s broader strategy to reduce state holdings in public enterprises, following the government’s decision to cut its stake in Safaricom. The administration is seeking to mobilize domestic capital to finance infrastructure, support the creation of sovereign funds and reduce reliance on external borrowing.

In local currency terms, the KPC deal surpasses Safaricom’s landmark 2008 IPO, which raised just over $388 million. The offering reflects a gradual broadening of Kenya’s investor base and the maturation of its capital markets.

The regional dimension underscores the transaction’s strategic weight. The Ugandan government announced that it had acquired a 20.15 percent stake in KPC through the IPO, citing its reliance on Kenya’s pipeline network, which handles more than 95 percent of Uganda’s monthly petroleum imports.

The dominance of institutional investors, however, raises questions about future liquidity. Such investors typically hold their stakes for the long term, potentially limiting secondary market trading. The stock’s performance after listing will serve as a test of the Nairobi exchange’s capacity to absorb large-scale offerings.

Olivier de Souza