NSSF smartly avoided investing in “overvalued” Kenya Pipeline Company

Uganda now owns 20.15% in EA’s most profitable petroleum and logistics enterprises. NEWS ANALYSIS | URN | Uganda’s National Social Security Fund has been on an investment spree in recent years, but its decision to stay away from the Kenya Pipeline Company Initial Public Offer tells a lot. In recent years it has acquired significant stakes in large companies like MTN Uganda, Airtel Uganda and Kampala Mariott Hotel, while raising stakes in Kenya’s Safaricom, KCB Banks and other stocks across Uganda, Rwanda and Tanzania stock markets.

Its equity allocation has now expanded to 18.4 percent of its total portfolio (worth about 5.93 trillion shillings). The Fund says it is this strategic shift away from being heavilly reliant on government treasury bills and bonds that has driven its gains recently, allowing it to declare the record 22.53 percent interest rate to savers for the financial 2025/2026. But the fund, Eastern Africa’s largest financial company by assets, stayed away from the recent floating of KPC, one of the region’s most valuable companies.

NSSF Chief Investments Officer, Kenneth Owera says that NSSF makes long and comprehensive analyses of all investment offers presented to it before making a decision to invest. NSSF, which recently came under pressure by Ugandan government officials to invest in infrastructure or development projects, says it did not see KPC as a viable opportunity due to its high pricing. NSSF Deputy Managing Director, Gerald Kasaato, says that at 9 Kenya shillings (about 270 Uganda shillings) per share, they concluded that the stock was overpriced and would not guarantee the returns that the Fund seeks for its savers, under the current situation.

He says the Price-to-Earnings (P/E) Ratio of KPC stock which is about 21, is too high. The P/E ratio is the measurement that compares a company’s stock price to its earnings per share, showing how much investors are paying for each shilling of profit. In this case, investors would be paying 21 Kenya shilling for every 1 shillings of annual profit.

Kasaato says the highest P/E on a stock ever listed in East Africa was Safaricom, which NSSF also participated in, and adds that Safaricom presented attractive growth prospects, unlike KPC. Several analysts in Uganda and Kenya viewed the nine shillings per share as too high, saying the company had been highly overvalued.