Blog Archive

Friday, August 11, 2006

New Listings on NSE in 2006-7... Wishful thinking?

Since KenGen & ScanGroup's massive oversubscription & the presence of excess cash in the Kenyan economy, there has been a clamour for more IPOs, Offers for Sale, etc by Kenyans who are in the investing mood...

I expect the easy pickings to be first to be sold off...

Mumias - Already listed & very profitable with a excellent management team. The government might sell about 92 Million shares in Mumias bringing down its ownership to 20%. This would be the easiest sale/divestiture to accomplish since the shares are traded & the sale does not face the same hurdles as an IPO. Based on the current price, the government can expect almost KShs 5 Billion.

East African Portland Cement - It had been profitable under Ole Mapelu's management team who resigned en masse to protest government interference. Since the firm is listed, it will be an easier sell on the NSE but the debacle has hurt the attractiveness of the firm UNLESS the government becomes a minoirty shareholder. It is not LaFarge's ownership that is a problem but the government's even though it is portrayed as a LaFarge "issue". I would rather have LaFarge as a 42% owner than the government as a 1% owner!

Kenya Re - It has shown profitability in the past 2 years but investors should ask for a THOROUGH assessment of the assets & liabilities.

Eveready Batteries - It has a bad rap coz of declining sales & profits but might be a successful IPO at a fair price.

Safaricom - This would a mega-IPO by Kenyan standards. It faces multiple hurdles since Vodaphone probably has pre-emptive rights. If Vodaphone drops the pre-emptive right in exchange for an additional stake then the IPO can go forward.
I think the government will do an IPO during the electioneering period to energise campaign & boost political goodwill!

Telkom - No IPO until after:
  • Safaricom IPO
  • Suitable strategic/technical partner is found
  • Retrenchment of excess staff (not in an election year)
Kenya Ports Authority - Too political for now plus its a cash cow for the corrupt as well as gateway for "untaxed" goods. Look at the artur brothers saga.

Thoughts from other bloggers




bankelele said...

I also expect more people e.g. Manu Chandaria to follow in the Bharat Thakrar (Scangroup) way and reward themselves for decades of hard work while sharing the gains with Kenyans at the same time through an IPO.

Mumias: is about the government cashign in on a very profitable bouyant share market. There should be no impact on the price, just increased volumes as when CDC (UK) exited three years ago
EAPC: gets messier every day, even as cement is booming. If it doesn't sort out it's dome's, it may be overtaken by ARM in a few years

Eveready: If scangroup was a touvch sale, this will be tougher to market unless it's real cheap
Safaricom: the mother of them all
Telkom: With it's recent losses, not likely unless CMA waives the 3 year profit rule and government provides some guarantees

coldtusker said...

@Banks - I do not think the CMA will be able to approve new IPOs in time to take advantage of the bull run.

They will have Mumias & EAPC on their hands since the government is already looking at these as "Offers for Sale" to raise funds.

The government might offer some KCB shares on the market as an Offer for Sale.

If you add KenRe (an IPO) to the mix, I think CMA will not be able to process another issue esp one of the bigger Chandaria firms e.g. Mabati.

Eveready will be a tough sell but in this bull market there may be buyers (unaware or uncaring of the Merali "curse") just enough to cover an IPO.

gathinga said...

good topic to table here.

telkom faces a tricky scenerio. but Kibaki gave his word and put his reputation on the line on this one, promising 'privatisation in 2007' I wonder whether they will bend CMA rules to accomodate kibaki's promise.

But am sure you agree this gove has demonstrated more political will to divestiture than any other time in future. Besides the fat cats like mbaru's and all are in bed with senior govt officials to cash in on these IPOS. Because of this and the budget deficit of 18m to be funded from these sources, they must move forward.

EAPC. am sure will be very attractive whether govt is 1% owner or 40%. This is a growth industry and am sure kina lafarge would even like to increase their stake.

Eveready. Only the extreme elite like coldtusker are actualy aware of mreali bug. To most kenyans the guy is a credible businessperson in the league of chandaria. Speaking to my friends i was surprised to find out how little they know of him besides his wealth...this ipo will be sucessful.

have you heard anything on the rest
orion EA
Triple A capital
Adopt a light
sadolin paints
coop bank
all had expressed interest

Anonymous said...

Hi there!
I would like to burn a theme at this forum. There is such a thing, called HYIP, or High Yield Investment Program. It reminds of financial piramyde, but in rare cases one may happen to meet a company that really pays up to 2% daily not on invested money, but from real profits.

For several years , I make money with the help of these programs.
I don't have problems with money now, but there are heights that must be conquered . I make 2G daily, and I started with funny 500 bucks.
Right now, I managed to catch a guaranteed variant to make a sharp rise . Turn to my blog to get additional info. [url=]Online Investment Blog[/url]