Waweru’s Bank Pockets Sh1.16 Billion from KPC IPO While Ordinary Kenyans Fled the Sale

KPC IPO: The Fee Breakdown

Faida Investment Bank success fee: Sh1.06bn | Fixed advisory fee: Sh98.6mn | Placement fees (22 brokers, capped at 1.5%): Up to Sh1.59bn shared | Total government advisory spend (excl. success fee): ~Sh3bn | KPC listing date: March 9, 2026 | IPO subscription rate: 105.7% | Retail take-up: 19% of allocation | Foreign take-up: 0.15% of allocation | Oil marketers take-up: 0.14% of allocation

The cheque that Faida Investment Bank is set to collect from the Kenya Pipeline Company IPO dwarfs anything the firm has earned in its 31-year history. A success fee of Sh1.06 billion, a fixed advisory retainer of Sh98.6 million, and a share of the placement fees shared among 22 brokers — the cumulative payout to the bank linked to former Dagoretti South MP Dennis Waweru could surpass Sh1.16 billion.

To put that figure in context: in the year ended December 2024, Faida’s total net profit was a meagre Sh216,107. The KPC fee is not just a windfall. It is a structural transformation of the bank’s balance sheet.

The success fee is legally triggered and commercially clean. The information memorandum for the Sh106.3 billion IPO set the payment at one percent of gross proceeds plus 16 percent VAT upon oversubscription of the offer.

The IPO closed at a 105.7 percent subscription rate, raising Sh112 billion, and under the terms of the mandate, Faida earned every shilling of the bonus. Nobody is disputing the contractual arithmetic. The question is whether the market outcome that triggered the payout reflects genuine investor confidence — or something more complicated.

“The IPO received a 105.7 percent subscription rate. But retail Kenyans bought just 19 percent of their allocation. Foreign investors bought less than 0.2 percent of theirs.”

The anatomy of the IPO is unsparing. Local retail investors, whom President William Ruto publicly urged to buy shares for as little as Sh200, purchased stock worth Sh4.1 billion against their allocation of Sh21.2 billion — a take-up rate of roughly 19 percent.

Foreign investors, allocated an identical pool of Sh21.2 billion, spent a negligible Sh32.7 million, acquiring a rounding-error stake of 0.02 percent of the company. Oil marketing companies — the most natural strategic buyers in the entire transaction, the firms that feed fuel through KPC’s pipeline daily — took up shares worth Sh22.9 million against a Sh15.9 billion allocation, a participation rate of 0.14 percent. Major players including Vivo Energy, Rubis, and TotalEnergies abstained altogether.

Even KPC’s own employees, given a 5 percent reserved pool worth Sh5.3 billion, bought shares worth Sh99.1 million — an average of approximately Sh148,000 per person among the 670 staff reportedly participating.

Workers with the most intimate knowledge of a company’s operational realities — a 42 percent underspend on capital budget last year, an ongoing Sh3 billion environmental lawsuit over pipeline leaks — chose caution above enthusiasm.

The IPO was rescued in its final stretch by a concentration of buyers whose participation raises questions that regulators and Parliament’s Public Accounts Committee cannot afford to ignore.

Local institutional investors — led by the National Social Security Fund and the Public Service Superannuation Fund — absorbed Sh67 billion in shares, oversubscribing their segment by 216 percent while every other investor category fell dramatically short.

Reporting circulated that the government leaned on both funds to ensure the offer crossed its minimum threshold of Sh53.1 billion. Both institutions deny this characterisation. What is not in dispute is the pattern: the entities closest to the state stepped in when the market would not.

“Uganda secured veto powers over tariff adjustments, dividend policy, share dilution, and the appointment of the CEO — structural control over a company handling 80 percent of Kenya’s petroleum supply.”

The transaction’s single decisive actor, however, was Uganda’s state-owned Uganda National Oil Company, which acquired shares worth Sh34.7 billion — far exceeding its East African Community allocation of Sh21.2 billion — and secured a 20.15 percent stake in KPC. As part of a legally binding side letter negotiated ahead of the IPO, Uganda obtained veto powers over tariff adjustments, dividend policy changes, material amendments to the business plan, share dilution, governance restructuring, and the appointment of the company’s chief executive officer. Uganda also gained the right to appoint two directors to the nine-member KPC board.

Kenya financed this outcome by surrendering strategic governance rights over an asset that handles more than 80 percent of the country’s petroleum supply.

Whether this amounts to sound infrastructure policy or geopolitical improvisation by a government desperate to close a struggling deal remains a question Nairobi has not answered publicly.

THE WAWERU CONNECTION

Dennis Gichahi Waweru is not a household name to most Kenyans who do not follow the capital markets. To those who do, he is a fixture of Kenya’s investment banking establishment. A Partner and Director at Faida Investment Bank, he served as the Member of Parliament for Dagoretti South from 2013 to 2017 before losing the seat to John Kiarie.

He holds an MBA in Strategic Management from Moi University and lists over 22 years of experience as an investment banker. He also serves as Chairman of the Kenya Investment Authority — the government investment promotion body operating under the Ministry of Investments, Trade and Industry — a position he has held across successive administrations.

That last detail deserves pause. Waweru chairs a state institution under the current Ruto government. His bank simultaneously won the mandate to lead the most significant capital markets transaction of the Kenya Kwanza administration — a transaction the President personally championed, repeatedly described as a transparency benchmark, and staked political capital on.

Waweru was initially associated with the Kenyatta political orbit, serving as BBI Co-chair and a visible Jubilee-aligned figure. His retention as KenInvest chairman under Ruto, and the award of the KPC mandate to Faida, indicates that his utility to the state has survived the change of administration.

Faida won the KPC mandate through a competitive tender process floated by the Privatisation Commission in October 2024, inviting bids for lead transaction advisory services. The firm was awarded the letter of appointment and named lead transaction adviser.

That the process was formally competitive is on record. That Faida’s principal shareholder simultaneously chairs a government investment promotion agency and that the mandate was for the most politically sensitive transaction of the year — these are facts that, in a stronger accountability environment, would trigger public disclosure and parliamentary scrutiny of conflict-of-interest frameworks.

“Faida reported a net profit of Sh216,107 in 2024. The KPC success fee alone is worth more than 4,800 times that annual profit figure.”

The firm itself is a legitimate market participant of standing. In 2025, Faida ranked third in value of equities trades handled at the NSE with Sh35.97 billion, commanding a 12.36 percent market share. In the bonds market, it held a 7.55 percent share with Sh409.34 billion in combined trades.

Its team lead for the KPC transaction, Dr Belgrad Kenne, chaired the allocation committee that determined share apportionment across investor categories. The firm held at least four roadshows with oil marketing companies to court their participation — meetings that ultimately yielded 0.14 percent uptake. Whether the failure of that effort reflects inadequate marketing, an unwinnable valuation argument, or simply a price that sophisticated commercial actors refused to accept at scale, is the central question about whether Faida earned its bonus in any meaningful market sense.

A PRICE THE MARKET REFUSED

Faida itself endorsed the Sh9 per share offer price as lead transaction adviser — the same Sh9 that Dyer and Blair, the lead sponsoring broker, also validated.

Against them stood a range of independent valuations that told a different story.

Old Mutual Investment Group Uganda priced KPC shares at Sh4.61, warning of an embedded premium that would force post-listing repricing. Sterling Capital placed intrinsic value at Sh3.70. Some independent online analysts went lower still. The government’s pricing implied a price-to-earnings ratio of approximately 22 times based on KPC’s earnings per share of Sh0.4122 for the year to June 2025.

Kenya Power, for context, trades at 1.2 times earnings. KenGen at 4 times. Safaricom — Kenya’s most profitable and liquid listed company — at 8 to 9 times.

The government priced a state monopoly carrying a corruption investigation, unresolved pipeline leaks, and a chronic capital budget underspend as though it were a high-growth technology firm. It then appointed a lead adviser financially incentivised by a one percent success fee to validate and defend that pricing.

The incentive structure is internally consistent: the higher the price at which the deal closes, the larger the fee. Whether it is compatible with independent adviser duty is a question the Capital Markets Authority has not yet addressed publicly.

Standard Investment Bank’s senior research associate Wesley Manambo issued a buy recommendation for the IPO but restricted it explicitly to investors with a long time horizon, warning of limited attraction for shorter-term participants.

With the KPC listing commencing today, March 9, and institutional holders expected to maintain positions indefinitely, secondary market liquidity is widely expected to be thin in the opening weeks. Investors who bought for income have accepted a dividend payout ratio cut from 94.5 percent to 50 percent to fund capital expenditure. Investors who bought for growth bought at a price independent analysts placed well above intrinsic value.

WHERE THE MONEY GOES

President William Ruto.

Of the Sh112 billion raised, none returns to KPC. All proceeds flow to the National Infrastructure Fund as seed capital for President Ruto’s infrastructure investment programme.

The Fund’s legal standing is currently before the High Court, which is examining whether its establishment bypassed constitutional safeguards. The National Infrastructure Fund Bill was still before the National Assembly this week.

Investors have purchased shares in a company whose proceeds flow into a fund whose constitutionality is under active judicial scrutiny — a structural risk that was not foregrounded in government communications ahead of the IPO.

Total government expenditure on the transaction, excluding Faida’s conditional success fee, reaches approximately Sh3 billion.

That figure covers legal advisers TripleOKLaw Advocates and G&A Advocates LLP at Sh31.9 million, reporting accountants PricewaterhouseCoopers at Sh13.45 million, public relations firm Apex Porter Novelli at Sh42.13 million, advertising agency Belva Digital at Sh12.26 million, Image Registrars for data processing and registrar services at Sh70.35 million, and the three receiving banks collectively at Sh16.35 million.

The CMA collected Sh30 million in approval fees and the NSE Sh1.5 million in listing fees. Against all of that combined spend, the single fee to Faida — Sh1.16 billion — exceeds the entire remainder of the advisory bill.

The 22 stockbrokers and investment banks enlisted to handle the sale will share a maximum of Sh1.59 billion in placement fees capped at 1.5 percent of the offer size. Faida will participate in that pool as well, collecting additional millions beyond its advisory retainer and success fee depending on the volume of shares it processed directly.

DID FAIDA EARN IT?

The contractual answer is yes. The fee was set in advance, the terms were disclosed in the information memorandum, the subscription threshold was met, and the oversubscription is real by the numbers. In that narrow commercial sense, Faida performed exactly what the mandate required. The more probing question is whether the mandate itself was designed for success — or for accountability.

A lead transaction adviser that endorses the government’s pricing, markets a product that retail, foreign, and strategic investors overwhelmingly reject, and then collects a nine-figure success fee because pension funds controlled by the same government stepped in to rescue the deal, has technically earned its fee while arguably demonstrating a market failure the fee structure was designed to obscure. The success fee mechanism rewards closure, not quality of demand. It rewards the headline subscription rate, not the distribution of ownership or the price integrity of the transaction.

The government raised its Sh106.3 billion. The numbers cleared the threshold. Faida triggered its bonus. But the retail Kenyan who was invited to buy shares for Sh200 owns 2.56 percent of the company.

A foreign sovereign with veto rights over its CEO appointment owns 20.15 percent. State-adjacent pension funds — whose fiduciary obligations to workers are now tied to post-listing price discovery against an entry point that independent analysts placed below fair value — own the largest single block.

The democratisation of national assets that the government promised produced a company that ordinary Kenyans fled, institutions were pressured to rescue, and a neighbour was rewarded with governance control for buying in. In that context, the Sh1.16 billion cheque heading to Waweru’s bank is technically deserved and analytically remarkable — a reward for presiding over a transaction that the free market declined to validate.