Nigerian billionaire Aliko Dangote's $327 million Kenya pipeline deal gets president's backing

Kenya's President William Ruto defended the sale of almost a quarter of Kenya Pipeline Company Ltd. to Nigerian billionaire Aliko Dangote, accusing critics of the deal of wanting to buy state assets cheaply and resell them for a quick profit, as a rally in the company's shares lifted the value of Dangote's stake by about $45 million in two days.

"I may be the President, but I know what I am doing," Ruto said on Sunday at a church service at AIC Kasina in Mwingi, in eastern Kenya. "There is no way we are going to undervalue Kenya Pipeline shares to benefit brokers and loan sharks like you."

Dangote's group bought about 4.5 billion Kenya Pipeline shares, or 24.76% of the company, from state pension funds and agencies for about 42.5 billion shillings ($327 million) last week, making it the second-largest shareholder after the Kenyan government. The stake changed hands on the Nairobi Securities Exchange on Oct. 19, and Dangote confirmed the purchase two days later at a business summit in London.

Shares hit a record

Investors have since piled into the stock. Kenya Pipeline shares climbed 18.65% over Thursday and Friday to a record 10.75 shillings, adding about 30.7 billion shillings to the company's market value. Friday's gain alone was close to 10%. The block Dangote bought had traded at between 9.02 shillings and 9.36 shillings a share.

At Friday's price, his stake is worth about 48.4 billion shillings ($373 million), roughly 5.9 billion shillings ($45 million) more than the group paid.

Ruto pointed to the rise as proof that the price was fair. He said the shares had gained 10% in a week and could double or triple in value over the next four to five years, and described Dangote as a long-term investor who had paid with his own money.

"We must keep petty politics out of investors and investment opportunities as a nation," he said.

Nyoro questions the sale

The president's remarks were aimed at Ndindi Nyoro, the leader of the opposition People's Party of Kenya, who has led criticism of the deal. Nyoro has questioned whether state institutions, including the National Social Security Fund and the Unclaimed Financial Assets Authority, were used to buy shares in Kenya Pipeline's initial public offering earlier this year only to sell part of them to a private investor. He has also asked whether the returns justified the risks for pension savers and suggested the sale could be a step toward Dangote and Ruto gaining majority control of the pipeline operator.

Ruto said some of the same critics had earlier argued that the 9-shilling offer price was too high. He accused them of operating as brokers and compared their position to a past episode in which, he said, Kenya Power shares bought at 2 shillings were later sold at 19 shillings.

Kenya sold 65% of Kenya Pipeline in the offering, which ran from January to February, and the shares began trading on March 9. Private investors took up few of the shares, leaving state-backed pension schemes and agencies to buy a large part of the issue. After last week's sale, the government holds 35% of the company and Uganda National Oil Co. holds 20.15%.

Part of a wider East Africa push

Kenya Pipeline runs the network that carries fuel from the port of Mombasa across Kenya and on to Uganda and other neighboring countries. The stake gives Dangote a direct role in moving fuel through the region as he plans a 700,000-barrel-a-day refinery in Lamu, on Kenya's northern coast. Ruto and Dangote broke ground on the project on Sept. 30.

Ruto said foreign direct investment into Kenya had risen to $3.2 billion this year from $1.5 billion in 2022, and that he wants annual inflows of $8 billion to $10 billion over the next four years.

Dangote, Africa's richest person, controls Dangote Industries Ltd., whose businesses span cement, sugar, fertilizer and oil refining. His 650,000-barrel-a-day refinery near Lagos is in the final days of an initial public offering in Nigeria that closes on Oct. 27.