Uganda’s only Pension fund National Social Security Fund (NSSF) today received a cheque of 1.3 Million dollars from power distributor Umeme Limited the as gross dividend payment for its 231,722,771 shareholding in the company.
NSSF is the third largest institutional investor in the utility distribution company, after purchasing an additional 100million shares in the company last year, which increased its stake to 14.27%. South African based Investec Funds and UK’s Actis are the other top investors in Umeme.
Handing over the cheque to NSSF Managing Director Mr. Richard Byarugaba, the Umeme Managing Director, Mr. Selestino Babungi described 2014 as ‘a successful and eventful year for Umeme, which witnessed a steady growth value to our shareholders.”
NSSF Managing Director Richard Byarugaba reiterated that the Fund’s investment strategy is paying dividends, and Umeme is one such example.
“The numbers tell a story: we invested a total of Ushs 70.2 billion (Over 20 Million dollars) in Umeme, and have so far earned Ushs 13.6 billion as dividends (3.7 Million dollars). As at June 30, 2015, the capital gains stood at Ushs 44.5 billion (Over 12.6 Million dollars) and the total value of our investment at Ushs 114.7 billion (33 Million Dollars) By any measure, an 83% return since we invested in Umeme is outstanding,” he said.
He added that the Fund would continue to seek opportunities in equities in Uganda and within the East African region as it reduces concentration in fixed income investments.
“Increasing our exposure to the equities offers us an opportunity for diversification, hence enabling us to get a good return from the fast growing companies, and Umeme has been a great example of this kind of investment,” he said.
Mr. Babungi said with only 15% of Ugandans covered by the national grid, there was a lot of potential for more investment in the energy sector.
He said the utility’s main focus will be to improve electricity access in tandem with the Government’s vision to have up to 40% of the country covered by 2040.
“This will require heavy investments in infrastructure development, technology innovation, human resources and top-notch customer care service, which will ultimately ensure good shareholder value,” Mr. Babungi said.
Byarugaba said that all investment decisions are taken in the interest of the members, and the Fund would continue to delicately balance risk and return on their savings.
“Such dividend earnings underpin the Fund’s overall aggressive but prudent investment strategy that has led to revenue growth of more 200% and payment of a return above 10 year average inflation to members, over the last 3 years,” Byarugaba said.
He also dedicated the Dividend payout to the Fund’s Deceased Board Chair Ivan Kyayonka who passed away this year. Ivan spearheaded the Fund’s Decision to Invest in UMEME and defended amidst the storms it Faced.
NSSF paid 11.5% interest to members last year, and is on course to declare another double digit interest rate this year.