Kenya’s decision to offload a 15% stake in Safaricom to Vodafone for Ksh.204.3 billion ($1.57 billion), rising to Ksh.244.5 billion ($1.88 billion) after an added upfront dividend payment, sidelined both retail and institutional local investors from what is now the largest equity transaction in the country’s history.
The move has revived longstanding concerns about transparency and access in state asset sales.
Instead of offering the shares to the public through the Nairobi Securities Exchange (NSE), the government opted for a private, negotiated deal with Vodafone.
The transaction raises Vodafone’s ownership in Safaricom to 55%, reducing the state’s stake to 20%, while public investors remain with 25%.
Treasury Cabinet Secretary John Mbadi defended the approach on Thursday, saying the structure was shaped by pricing benefits and urgent fiscal needs.
“This partial 15% divestiture will generate approximately Ksh.244.5 billion in aggregate proceeds,” he said at a Safaricom briefing. “It is important to note that this transaction has gained us a 23.6% premium on the six-month volume-weighted average price.”
The government confirmed Vodafone agreed to pay Ksh.34 ($0.26) per share, reflecting the 23.6% premium, which, according to Treasury, outweighed any advantages of conducting a public offer.
Vodafone echoed this rationale, in that its proposal best matched Kenya’s financial needs and Safaricom’s long-term strategic direction.
“Vodafone offered a premium, making it the most financially sound option,” the company said. “A globally experienced majority shareholder delivers more than just capital.”
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However, the structure effectively denied Kenyan pension funds, SACCOs, and retail investors an opportunity to expand their holdings in the country’s most stable, profitable and consistent dividend-paying stock.
Unlike earlier privatisation efforts, such as the KenGen sale and Safaricom’s original IPO, this deal was concluded through closed-door negotiations and will only become fully transparent through subsequent regulatory filings.
Treasury said none of the proceeds will be used for recurrent expenditure, with the CS confirming the funds will instead act as seed capital for the proposed National Infrastructure Fund and Sovereign Wealth Fund, all subject to parliamentary approval of the necessary legal framework.
Vodafone will also make an upfront payment in place of future dividends on the government’s remaining 20% stake, providing additional short-term fiscal relief.
What this means is that Safaricom, henceforth, will not enjoy state control as earlier witnessed, leaving it under full control by a foreign-operated company.
The transaction still requires approvals from parliament, the Capital Markets Authority (CMA), and the Competition Authority of Kenya (CAK).
