Shares of blue chip companies, including Safaricom, Absa, KCB and Britam, are among the more than 1.2 billion that have been handed over to the Unclaimed Financial Assets Authority (UFAA).
Safaricom tops the list of abandoned shares/assets, worth billions of shillings, after handing 196.4 million shares, according to new disclosures made by the Nairobi Securities Exchange (NSE) to the UFAA.
The unclaimed Safaricom shares that would raise Sh3.5 billion today, represent nearly one-fifth or 16.3 percent of the 1.203 billion shares that were listed as abandoned by the UFAA at the end of last year and which carried an estimated value of Sh30.17 billion.
Other notable counters with unclaimed shares include Absa, KCB and Britam which have 44.7 million, 44.5 million and 34.8 million.
Nevertheless, some counters such as Kenya Power have no unclaimed shares with the NSE disclosing a 100 percent success rate in reconciling more than 43.5 million shares that had fallen into the unclaimed status.
Analysts have linked the high number of abandoned Safaricom shares to the counter’s dominance and attraction, especially among retail investors which makes the share to be one of the most owned on the NSE.
“Safaricom is a blue chip and the golden egg for our NSE and hence its large exposure among investors. Equally, this means the stock has a higher probability to feature among the most abandoned shares at the NSE,” noted Wesley Manambo, a research analyst at Genghis Capital.
Shares are usually classified as unclaimed or abandoned if the person who bought them fails to claim a dividend, distribution or other sum payable as a result of the interest held for more than three years.
The UFAA Act also dictates that shares become unclaimed when the business entity does not know the whereabouts of the owner at the end of three years.
At the same time, a share becomes abandoned when the return of official shareholder notifications or communications goes undelivered.
Nevertheless, Mr Manambo argues the criteria for the determination of shares as abandoned masks the participation of long-term investors who routinely buy shares and maintain a holding position for an extended period without contact with brokers.
The NSE in collaboration with the UFAA is reviewing strategies to unlock the unclaimed stocks with an eye on gains such as increased market liquidity, value discovery and capital gains.
Among the strategies proposed are the consolidation of odd lots (incomplete sets of shares usually less than 100, the minimum tradable volume), and trading them on the NSE.
Additionally, the NSE has proposed the consolidation of the odd lots through lending and borrowing.
