Firms in Kenya Pipeline IPO to pocket over Sh200m

Kenya Pipeline Company storage facilities in Nairobi. [File, Standard]

The sale of the Kenya Pipeline Company (KPC) through an Initial Public Offering at the Nairobi Securities Exchange (NSE) is now taking shape.

A group of consultancy firms that will steer the sale is settling down to work on what will be the largest IPO in the region since the listing of Safaricom in 2008. 

The sale of a 65 per cent stake by the government is expected to raise Sh100 billion, which will plug budget holes over the current financial year but also be invested in the planned National Infrastructure Fund and the Sovereign Wealth Fund.

The process is expected to be concluded within a tight deadline of March 31. 

The consultants, made up of banks, lawyers, and marketing agencies, are now expected to get going by undertaking a wide ranging exercises that varies from valuing the company and determining the IPO price to carrying out roadshows to sensitise investors.

Combined, the advisors are set to make more than Sh200 million, according to disclosures on the government’s Public Procurement Information Portal. 

The consultancy firms are led by Faida Investment Bank Ltd. The firm was selected as the lead transaction advisor for Sh98.6 million, tasked with the overall role of managing and coordinating the IPO process, including overseeing the other advisors.

“The lead transaction advisor will have primary responsibility for planning, managing, and coordinating the entire IPO transaction process,” says the Privatisation Authority in the tender documents when it started recruiting the consultants.

Faida will also “serve as the overall coordinator of other consultants and will be supported by other specialised consultants for the purpose of executing the IPO.”

It will also create the investment prospectus, which will act as a disclosure document for investors aimed at enabling them to gauge the health of KPC from different angles.

Faida will also oversee the creation of a prospectus, the valuing of KPC and determining the IPO price, as well as overall management of allotment of shares to investors. 

The money that Faida will be paid is slightly lower than the Sh100 million cap set by MPs when they approved the sale of KPC in August last year. 

“There is a need for the transaction advisors to be procured transparently and competitively, and the cost of the transaction, set at Sh100 million, should not deviate from reasonable market rates,” reads the National Assembly’s report on Sessional Paper No. 2 of 2025 on the privatisation of KPC. 

Typically, there are other fees and commissions that the lead transaction advisor may receive for a successful IPO. 

Dyer & Blair Investment Bank will be the lead stockbroker, while Francis Drummond will be the co-sponsoring stockbroker.

Belva Digital Ltd, a marketing and communications company, will provide advertising and public relations services at a cost of Sh12.26 million. 

The firm is expected to “develop a public relations, media, and communications strategy to support the IPO process,” according to the tender documents.

This will form part of the larger public awareness campaigns, aimed at getting the public to buy-in to the IPO but also entice investors to own KPC shares. 

It will reach out to the diverse pool of investors the government hopes to attract, both local and foreign.

President William Ruto, speaking in London last July, pitched the company to international investors, noting that it offered investors a unique opportunity to deploy capital in one of Kenya's most strategic infrastructure enterprises.

He has also drummed up KPC ownership among Kenyans, noting that it would give an opportunity to directly own the company “even if you have Sh200 or Sh300”. 

Law firm Tripleoklaw LLP will provide legal services for Sh31.9 million. The lawyers from Tripleoklaw will conduct legal due diligence, “including a review of all legal documents, contracts, licenses, and statutory compliance in accordance with applicable laws and regulations." 

Other key firms that will steer the IPO are the Cooperative Bank and KCB, which will be the receiving banks.

The banks, according to the tender documents, will be “managing the processing of application forms, reconciling applications and payments and ensuring timely remittance and reporting.”

Image Registrars will provide registrar services for Sh70.35 million. The company will maintain the shareholder database on completion of the IPO, ensuring that the shares are credited to the owners’ CDSC accounts, while it will manage dividend payouts in future.

Image Registrars won a battle with rival, Custody and Registrars Services Ltd, which had protested its award of the contract at the Public Procurement Administrative Review Board (PPARB).

The two firms were the only bidders, and Custody and Registrars was knocked out at the evaluation stage, after getting a score of 62.25 per cent at the technical evaluation stage against a required minimum of 80 per cent. 

It, however, protests,d arguing that the technical evaluation criterion was restrictive and discriminatory, contrary to Article 227 of theConstitution and the Public Procurement and Disposal Act.

Among the issues it challenged included the requirement that bidders demonstrate experience with at least three large clients, each having registers of over 100,000 shareholders, arguing that only a few such registers exist in Kenya, most of which are managed by Image Registrars.

The Privatisation Authority also required firms to demonstrate experience in handling Kenyan IPOs and Rights Issues within the last ten years.

Custody and Registrars termed the thresholds as untaintable and did not reflect practical realities of the local securities market, where, for instance, there have only been two IPOs over the last decade. 

Image Registrars, however, won the case after PPARB ruled that the Custody and Registrars application to nullify the contract was time barred, as it was made more than 14 days after Custody and Registrars became aware of the ‘alleged breach’ in the tender documents on October 15.

The board also noted that the firm had gone on to place its bid, subjecting itself to the evaluation criteria, which it should have challenged before participating in the tendering process.