Friday, May 26, 2006

Aga Khan controlled Firms vs Merali controlled Firms on the NSE

Aga Khan Firms

Professionally run firms that draw on the resources of the Aga Khan network.

Diamond Trust - It is one of Kenya's largest banks & has done very well for its minority shareholders over the past 10 years. It has issued numerous bonuses.

TPSEA ("Serena") - Started out as TPS Holdings which was "absorbed" into TPS East Africa by giving 1.35 TPSEA for each TPSH share. The share price has risen over 100% since Jan 2005. Note that TPS Holdings (not TPSEA) was the listed entity on Jan 1 2005 therefore the current price for TPSEA should be multiplied by 1.35 to compare apples to apples.

Jubilee Insurance - A solid steady performer that has issued bonuses in the past & is at all-time high

Nation Media - Very successful media house that has expanded regionally despite the EA governments' attempts to muzzle it. Witness the misguided threats by Kenyan ministers like michuki, Tanzania's idiotic deportation of Kenyan newsmen/journalists/editors & Uganda's attempts to muzzle the Monitor as well as Nation's radio stations. There must be something in L. Victoria's water that make the EA governments act nicompoopy. Anyway, great profit growth with decent dividends & bonuses since it went public.

Merali Firms

Politically connected during the moi era thus the "meteoric" rise was a front.

Sameer Africa - Formerly Firestone EA & named after his son Sameer. It went public at KES 35.50 & it is still a mystery who bought the shares at the IPO which was horrendously overpriced. The price went up for the briefest of moments during initial trading. The price has NEVER reached the IPO levels since then!

The original shares purchased by merali belonged to icdc & were purchased at 5/- per share then sold at 35.50. Apparently NSSF was one of the largest buyers at the IPO netting merali 30/- per share. In essence ICDC (a controlled gov't entity) sold to NSSF (a gov't controlled entity) shares in Firestone with a "commission" accruing to merali of 30/- per share!

Sasini - It has a public company for a long time & pre-dates merali who took majority control. The highest price was 120/- (diluted) during the early-mid 90s. Sasini had given a 3:1 bonus which "boosted" the price to 300/- but fell to 100/- to 120/- range post bonus. Shareholders who bought at 100/- have been crying in their tea cup since then!

Bottomline:

Buy Aga Khan firms esp at IPOs but avoid Merali IPOs!
EVERY listed Aga Khan firm has made money (better than average returns) for its minority shareholders.

7 comments:

Anonymous said...

what is your opinon on the upcoming eveready ipo vis-a-vis merali despite the fact that it has been profitable and there will be no political meddling. Would yu recomend a buy

gathinga said...

anaon: i woudnt consider buying eveready at the IPO. From the outset, eveready's earnings are on the decline from what they used to be in the 90s. they have been hit ireparably by competition from cheap imports of the east....this company will take a miracle to grow beyond what it is now if the product mix remains


vitu: Is it true that wananchi online are planning an IPO next year

VituVingiSana said...

Eveready

We need to wait for the IPO prospectus before I can evaluate the offering. It is too premature at this stage.

General view: They need to expand beyond Kenya (REGIONAL) if they want to grow but they will have to compete against China & Egypt. The proclivity in EA is to buy cheap not quality so a "stale" but cheaper Chinese battery is preferred over a "fresh" but pricier Kenyan battery.

Unless Eveready can expand their range of products (PRODUCT RANGE) substantially beyond the "Dry Cell" their is limited scope.

Wananchi
They are issuing shares at the moment to their customers in a Private Placement. Many firms use this as a route to eventual listing on the NSE. The NSE/CMA rules are too rigid i.e. firms have to be profitable for 5 years before they can list! Let the buyers make that call not the CMA. This locks out good firms that need capital to grow. Firms can fail but CMA should monitor for fradulent accounting not police profits!

I am not privy to their prospectus. They can only list if they have been profitable for the past 4 years & will be profitable in 2006. Or if the CMA waives this requirement.

bankelele said...

There was a comment I saw on KTN earlier this year that no one seems to have caught on to. When Gerhard May announced Celtel's 1st profit of 2 billion shillings which he attributed to subscriber growth and cost cutting - including that the company had recently negoatiated their Ericsson contract down by 75%! I was shocked - how lopsided had it been before?

pesa tu said...

Bankelele: Contracts are negotiated to make the current mgt. good, So a mgr will negotiate a bad contract even if in the LONG RUN its bad. As long as the Short term is good

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