NAIROBI, Kenya, Jan 16 – The National Treasury has come under scrutiny over its decision to bypass competitive bidding in the planned sale of its 15 percent stake in Safaricom Plc, with the Institute of Certified Public Accountants of Kenya (ICPAK) questioning whether the approach guarantees value for taxpayers.
Appearing before the National Assembly Finance and Planning Committee, ICPAK representative Sandeep Maina challenged the Treasury’s decision to pursue a direct sale to Vodafone Kenya, arguing that the absence of an open bidding process limited price discovery.
Maina questioned whether the proposed valuation of Safaricom at Sh34 per share, translating to about Sh204.3 billion for the stake, reflected the best possible return, noting that the government had not tested the market to determine whether higher offers could have emerged.
In response, the Treasury defended the single-bidder strategy, arguing that opening the transaction to competitive bidding carried valuation risks. Officials said a market process could yield offers below Vodafone Kenya’s price, weakening the government’s negotiating position and eliminating the certainty of the proposed valuation.
The Treasury also ruled out a sale to private equity investors, citing concerns that such firms may lack operational expertise and could demand lower premiums. They referenced the government’s previous experience with Helios Investment Partners at Telkom Kenya as an example of challenges associated with private equity ownership.
Similarly, the option of selling the stake through the Nairobi Securities Exchange was dismissed, with the Treasury citing concerns about market saturation. Officials said a public offer could coincide with other planned state listings, including the Kenya Pipeline Company, potentially requiring costly underwriting to guarantee uptake.
The Treasury further argued that the size of the transaction narrowed the pool of potential buyers, noting the difficulty of finding alternative investors capable of mobilising more than Sh244.5 billion to complete the deal.
Officials maintained that Vodafone Kenya’s position as an existing shareholder reduced execution risk and justified a continuity premium, adding that a new investor might discount the valuation to account for unfamiliar operational and regulatory risks.
The parliamentary committee is expected to continue reviewing the transaction as part of its oversight of the proposed divestiture.
