1 February 2011

Uganda: National Social Security Fund Sells Stanbic Shares for Sh4.6 Billion

NATIONAL Social Security Fund (NSSF) yesterday sold 16.4 million Stanbic Bank shares worth sh4.6b to Crane Financial Services, the second gigantic transaction by the fund in a month.

Last week, Stanbic announced that its earnings for 2010 were expected to be 20-25% lower than the previous year.

Richard Byarugaba, the NSSF chief executive officer, confirmed the deal.

He pointed out that the deal was good for the fund because it fits into their strategy.

"Very (good deal). It is better than the last time (December 28). Our strategy is to look for opportunities and take gains when we can," said Byarugaba.

A.R. Kalan, the Crane Bank managing director, confirmed the deal, saying the bank's sister firm, Crane Financial Services, bought the shares.

"It is true that we did buy," Kalan said, adding his firm only takes instructions on behalf of clients "and it's for the client to decide what is good or a bad deal."

NSSF commands a sizeable portfolio on the stock exchange, holding almost 80% of the shareholding accumulated.

On December 28, 2010 NSSF sold 40 million Stanbic shares worth sh11b, the largest ever single trade since the bourse commenced trading over 12 years ago.

A market analyst said despite the Stanbic profit warning, fund managers had not revised their price offers.

"Sustainably, this should not have any impact on the price. It could hover between sh275 to sh280," said the analyst.

African Alliance sold the shares on behalf of NSSF.

Kenneth Kitariko, the general manager, said investors could still be confident in Stanbic despite the warning.

"I suppose the market is still bullish for the Stanbic stock. If there has to be a reaction to the profit warning, it will be delayed and muted," said Kitariko.

Yesterday, there was a further demand for over five million Stanbic shares but there was no marching seller.

The other major transaction close to yesterday's deal was at the East African Breweries counter that resulted into sh4b turnover.

Stanbic listed on the Uganda Security Exchange in January 2007.

To date, it is the most liquid or frequently traded company at the exchange.

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