Bamburi investors eye special dividend as Uganda deal closes

Bamburi Cement has sold its entire stake in Ugandan subsidiary Hima Cement for an estimated $84 million (Sh12 billion), raising prospects of rewarding shareholders with a special dividend.

The Nairobi Securities Exchange-listed firm said Thursday the sale of the entire 70 percent stake to a consortium of Sarrai Group and Rwimi Holding was completed on March 5 after it got all the regulatory and shareholder approvals.

Read: Bamburi completes Sh12bn sale of Uganda subsidiary

The completion of the deal injects the amount into Bamburi’s books, giving it room to pay a special dividend, subject to the capital allocation plans reviewed by the board and management as shareholders were promised.

“The proceeds received from this transaction … (provide) ability for Bamburi to pay a special dividend to its shareholders, subject to Bamburi’s dividend strategy and receipt of relevant approvals,” said the company in the circular. The cement manufacturer will soon announce its results for the year ended December.

The prospect of the special payout has lifted its share price to current levels of Sh42.5, near the 52-week high of Sh43.4 recorded on February 28.

A special dividend will be a boost to Bamburi investors considering that the firm in July last year paid a dividend of Sh0.75 per ordinary share amounting to Sh272 million, marking a 79 percent cut from the Sh3.75 per share or a total of Sh1.3 billion that had been distributed earlier.

The cut in dividend was on the back of Bamburi net profit dropping by 86.9 percent to Sh181 million as sales reduced and costs increased. The Hima unit has historically had a limited dividend distribution record with the last two payouts coming in 2023 and 2016.

Bamburi had told shareholders the cumulative statutory net profit of Hima over the five-year period to end of 2022 has been about Sh965 million compared to more than Sh5 billion for Bamburi. As such, it said, the sale of shares in Hima offers it a “decent on off return” on its investment.

Read: Bamburi eyes extra payout from sale of Uganda unit

The cement-maker also sees the sale of Hima allowing it to focus its efforts and invest further in its operations and business in Kenya. The firm said yesterday in a notice that the deal was completed after all the conditions precedent to the transaction were satisfied.

“Following the completion of the Transaction, Bamburi has fully divested its proprietary interest in Hima Cement Limited and Hima Cement Limited will no longer be reported as a subsidiary of Bamburi,” said the firm.

Bamburi mid-November 2023 announced that it intended to sell 1,335,600 ordinary shares in Hima Cement Limited —representing 70 percent of the total issued shares.

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