Why Kenya kept retail investors out of its biggest Safaricom sale yet

Kenya’s decision to sell a 15% stake in Safaricom directly to Vodafone for KES 204.3 billion ($1.57 billion) from the share sale itself, rising to KES 244.5 billion ($1.88 billion) after an added upfront dividend payment, is locking out retail and institutional local investors from the largest equity transaction in the country’s history, reopening an old debate about who gets access to state asset sales.

The Kenyan government opted for a private, negotiated sale to Vodafone rather than a public offer through the Nairobi Securities Exchange (NSE). The deal gives Vodafone a 55% majority in Safaricom and cuts the state’s holding to 20%, with public investors left at 25%. 

Treasury Cabinet Secretary John Mbadi defended the structure on Thursday, saying the choice was driven by price and fiscal urgency rather than market access. 

“This partial 15% divestiture will generate approximately KES 244.5 billion in aggregate proceeds,” Mbadi said at a Safaricom briefing. “It is important to note that this transaction has gained us a 23.6% premium on the 6-month volume weighted average price.”

The government says Vodafone paid a 23.6% premium to Safaricom’s six-month volume-weighted average price, buying the shares at KES 34 ($0.26) each. That premium, treasury argues, outweighed the benefits of a broader public sale.

Vodafone echoed that logic, saying the transaction balanced fiscal needs with long-term strategy. “Vodafone offered a premium, making it the most financially sound option,” the company said in a statement. “A globally experienced majority shareholder delivers more than just capital.”

The structure means Kenyan pension funds, savings and credit cooperative organisations (SACCOs), and retail investors were denied the chance to bid for a larger slice of the country’s most reliable dividend stock. 

In contrast to past privatisations such as KenGen and Safaricom’s IPO, where public participation was central, this transaction was negotiated behind closed doors and will only be disclosed in full through regulatory filings after the fact.

Treasury insists the proceeds will not be used for day-to-day spending. Mbadi said the funds will serve as seed capital for a planned National Infrastructure Fund and Sovereign Wealth Fund, once parliament approves their legal framework.

Vodafone added that it would also make an upfront payment instead of future dividends on the government’s remaining 20%, giving the treasury additional short-term cash cover.

Even so, Safaricom now moves from state-backed national champion to fully foreign-led operator, while local investors remain locked at the margins of the biggest balance-sheet reshuffle in Kenya’s capital markets in more than a decade.

Besides parliament, the deal still requires additional approval from the Capital Markets Authority (CMA), the Competition Authority (CAK), and sector regulators.