Capital Markets
Equities rise to record Sh32bn on EABL deal
Tuesday April 04 2023
The Nairobi Securities Exchange. FILE PHOTO | DIANA NGILA | NMG
The successful closing of British multinational Diageo’s Sh22.7 billion purchase of additional shares in East African Breweries Ltd (EABL) boosted the monthly equity turnover at the Nairobi bourse to a record high of Sh32.37 billion in March.
Nairobi Securities Exchange (NSE) data shows that the purchase was recorded on the market on March 21, four days after the closure of the sale window during which investors offered Diageo a total of 143.52 million shares.
The company bought 118.4 million shares in the brewer at Sh192 per unit, which put the total purchase cost at Sh22.7 billion.
The sale was done in two phases which ran from February 6 to 24, and between February 27 and March 17, with both phases posting oversubscription.
Read: Diageo kicks off Sh22.7bn EABL stake raise
On March 21, the NSE recorded a total of 118.43 million EABL shares changing hands, which saw the day’s turnover hitting a daily record of Sh23.5 billion.
Overall, the outlier raised the monthly total to Sh32.37 billion, a seven-fold jump month on month from the Sh4.61 billion worth of shares traded in February, while boosting the total for the first quarter of the year to Sh44.8 billion from Sh17.5 billion in the fourth quarter of 2022.
The inclusion of the block trades in the daily NSE price list came just weeks after the bourse had amended its rules to allow for oversized trades to be shown on daily listings, a move meant to enhance the transparency of the market and give investors a truer picture of trade statistics.
Under the changes announced in February, the NSE said that block trades would constitute sales whose value: exceeds Sh3 billion in value and five percent or more of a listed company’s total issued shares, subject to a maximum of 24.99 percent.
In cases where the value of the shares is below Sh3 billion, the sale ought to constitute more than 15 percent of issued shares, subject to a maximum of 24.99 percent, for it to be considered a block trade.
The EABL transaction also had an effect on the foreign trading desk, which saw a spike in outflows on March 21 to Sh8.88 billion.
The net outflows during the month stood at a record Sh10.69 billion, dwarfing the Sh382.4 million outflows recorded in February.
Other than the jump in turnover, the other key indicators of the market in the first quarter of the year were all in the red.
Investor wealth at the NSE —as measured through market capitalisation— dropped by Sh229.8 billion or 11.6 percent in the period to Sh1.756 trillion.
The NSE All Share Index (NASI) was down by a similar margin of 11.4 percent to 112.76 points.
The benchmark NSE 20 Share index however contracted by a significantly smaller margin of 3.2 percent to 1,622 points.
Read: Diageo succeeds in raising EABL stake to 65 percent
The market cap-weighted NASI was affected more by the fall in the share price of the bourse’s largest listed firm Safaricom, which dropped by 24.7 percent in the period to Sh18.10.
