Suspect deals that put KenolKobil on regulator’s radar

French fuel firm Rubis offers to buy KenolKobil. [Courtesy]

A surge in the volume of KenolKobil shares traded last week has tipped the Capital Markets Authority (CMA) to possible insider trading.

CMA on Wednesday said it had identified irregular trading of the KenolKobil counter in the days before France’s Rubis Energie made public the offer to acquire the company.

The regulator added that it had instructed the Central Depository and Settlement Corporation (CDSC) to freeze suspected accounts to allow for the conduct of the necessary inquiries, with those found culpable set to be penalised. “CMA will disclose if any breaches of the law were established and the appropriate action is taken, if any, once the investigations are complete,” said CMA.

It is the high volumes moved over the last week that point to a possible insider trading, with investors who may have had knowledge of the planned buyout amassing the oil marketer’s shares.

On Tuesday, the KenolKobil counter was the day’s leading mover. A total of 373.46 million of the firm’s shares were traded, of which 367.79 million were the acquisition of Wells Petroleum Holdings’ 24.99 per cent stake in the marketer by Rubis.

Standard Investment Bank noted that the Tuesday’s acquisition “capped days of robust activity”. In the days before Rubis’ purchase of the 24.99 per cent stake, the counter, which was previously relatively calm with 100,000 shares changing hands daily, on average, suddenly started experiencing high volumes last week.

For instance, on Tuesday, October 16, total turnover hit for the stock reached 1.2 million shares, peaking throughout the week to 27.8 million on Thursday and 29.5 million on Monday, a day before Rubis’ acquisition.

“We would have to see how CMA will go about it and the kind of precedence that this will set. Currently, as long as the stake is under 25 per cent, it can be bought in the market without seeking approval from CMA,” said Grace Wangeci, an analyst at Genghis Capital.

KenolKobil’s share price on Wednesday jumped to a historical high of Sh21.75 following the Rubis announcement that it planned to acquire the company. The sharp rise could be of concern as further increases could see share priced higher than the Sh23 offer by the French firm.