Blog Archive

Wednesday, August 23, 2006

Scangroup IPO beats expectations!

The IPO attracted over 109,000 applications though 12,881 were rejected!

The valid applications were for 428,386,000 shares (621% subscrition rate). This even beats KenGen's oversubscription! There was KShs 4.5 Billion chasing a mere KShs 790 in IPO shares!

According to some brokers, there was greater demand but it was dampened by last few days when it seemed that the IPO was going to be oversubscribed. I wonder what the MPs feel about the IPO?

Category A - Employees. They are the luckiest group since they will get all the the largest allocation per applicant. Some employees could even get upto 20,000 shares!

Category B - Corporate. They are guaranteed upto 10,000 shares but some may get additional shares.

Category C - Individuals. They got really screwed! Even at just 500 shares (per the prospectus) there were too many applications! The allocation rules were modified.

The least allocation is 300 shares & the maximum is 6,100 shares.

  • Applicants for 500 shares got the sweetest deal i.e. 60% allocation
  • Applicants for 5,000 shares got 400 shares i.e. 8% allocation
  • Applicants for 1 Million shares got a mere 3,000 i.e. 0.3% allocation!

Bottomline
SG's IPO proves that Kenyans have the cash to invest.

We need to fast-track more IPOs to enable investing the cash in farms, factories, buildings, etc before these funds are used for consumption!

The government needs to issue infrastructure bonds to enable Kenya accelerate economic growth. The time is ripe to divest of all the utilities, including sell more shares in KenGen, KPLC & an IPO for KPA.

6 comments:

gathinga said...

cold. i applied for 5000 shares. how many do i get allocated. btw, any new regarding the refunds? tyhe timing

coldtusker said...

My friend... u get ONLY 400 shares! Yes, you read correct! Mia nne thus 8% allocation! If you had an application for 5,100 then 500!

Refunds will be sent out today directly to the CDAs (brokers, banks, agents) unless you applied to SG directly.

Expect a delay coz & confusion coz EVERYONE (including 500 share applicants) will get refunds. This means posta has lots of work to do as well as the brokers have to hand out over 100,000 cheques!

bankelele said...

Too much money chasing any investment.

However, as with Kengen, refunds were will be sent to brokers or financial instituions where the applications were collected, not mailed out (this is cheaper and safer than snail mail)

Kudrinketh said...

Even after using 8 proxies looks like i'm going to end up with just 3200 shares and a huge opportunity cost.I'm increasing the number of proxies to 25 for Kenya-Re.This is getting ridiculous!

coldtusker said...

@kudrineth - Ha ha... You mon ami are part of the problem!!!!

8 proxies! And now you want 25 proxies! How will you keep track???

I agree that there has to be a better way BUT in the USA the small shareholders get locked out!

I think SG was worried the IPO would flop thus the underwriting esp with the bad press they were getting. They should have sold more shares. Check back in a week... I might post an entry on alternate ways of selling shares.

I think the the best way to allocate (under the current system) is to treat everyone (corporate or individual) the same... allocate what is there & let the Institutions buy on the seconday market!

Kudrinketh said...

I know 25 proxies sounds crazy but u gotta do what u gotta do.I just instructed my siblings to open joint CDS accounts amongst each other and walla! 25 accounts held by 5 individuals.But u gotta keep it in the family.

I agree with you about SG not anticipating so much interest concidering that the last private IPO flopped, but they shoulda concidered the excess liquidity in the market.I can live with 3200 shares, at least I got more shares than the poor chaps who applied for a million shares only to get 3000 shares! unbelievable stuff!

I liked the Kengen formula,allocate to wananchi and let the corporate investors battle it out in the secondary market,after all they have a much longer staying power as indicated in KQ and Mumias IPOs.I hope Kenya-Re goes the same route.I'm telling you we're living in very interesting times in Kenya.