Tanzania NSSF to float shares to raise funds

Tanzania’s National Social Security Fund plans to sell shares in several companies it has a stake in.

It is seeking to raise more funds to meet rising pension obligations and expand its portfolio.

The public pension manager says it will float shares at the Dar es Salaam Stock Exchange, giving investors a chance to own stocks in the companies.

The Fund is working out the details of which companies it is likely to divest from in an exercise sources said could happen later this year or by mid 2013.

Ramadhan Dau, NSSF Director General, said his team is currently finalising details on the shares to float and the amount of money it expects to raise before seeking approvals from market regulators.

“The scheme would only float part of its stakes to the public but prior to that, it will withhold some for its members,” said Mr Dau. 

The NSSF’s share sale signals the growing market activity among public pensions managers in East Africa as they seek to raise funds, diversify their income streams and streamline their operations.

The trend has been triggered by the need to enhance return on investments to meet the performance expectations of boards of trustees and pensioners.

This has for example, seen them roll out huge real estate projects and gain control of ownership in big listed companies as is the case with Kenya’s NSSF, which currently holds big stakes in National Bank of Kenya and East African Portland Cement among other firms.

“This is modern thinking for a fund like NSSF Tanzania, which needs to grow its income sustainability,” said Daniel Mghwira, an analyst at Miradi Associates in Tanzania. 

The provident funds in Uganda, Kenya and Tanzania have been relying less on investments in the stock market, whose returns fluctuate with the rise and drop in share prices, to other investments especially property.

Last week, Kenya’s NSSF board sacked its managing director Alex Kazongo for what it termed as a failure to meet performance expectations. Mr Kazongo was replaced by Tom Odongo, the general manager (investments).

Kenya’s NSSF, which is managing assets worth about Sh110 billion ($1.3 billion), has also been aggressively positioning itself in some of the listed companies in which it has a significant stake, in what analysts say are plans to have effective control.

NSSF has a firm grip on the board of National Bank of Kenya and is expected to play a crucial role in seeking the appointment of a new managing director, with the incumbent Reuben Marambii expected to step down this year.

Uganda’s NSSF has recently appointed three new brokers — African Alliance Securities, Equity Stockbrokers and Crested Stocks and Securities — to handle its trading business in Uganda as the state provident fund accumulates stocks cheaply as it anticipates to profit from a rally in share prices by the end of 2012.