Blog Archive

Sunday, August 06, 2006

Scangroup IPO massively oversubscribed!

Rumour mill was working overtime about the oversubscription. I heard 20%, 80% & 100% but it turns out to be 400%! The 500% mentioned in the press INCLUDES the 100% shares available...

So Scangroup could have sold over 345 Million shares vs the 69 Million they have on offer!

Unfortunately, this means most applicants will get less than 10,000 shares & as low as 1,000 shares per applicant!

KenGen, a much larger offering, was only oversubscribed by 250%.

I expect the price to rise to 15/- as the corporate buyers (Mutual Funds, Insurance Companies, etc) try to buy on the secondary market BUT they are unlikely to pay "crazy" prices!

Well, whatever those idiotic MPs think (do they?), Kenyans voted with their wallets! Most banks were not even financing this IPO yet they had a 400% oversubscription.

Let the good times roll.

We need to have another large IPO to suck up the cash. Since Kenya Pipeline Corporation & Kenya Ports Authority are showing good profits, they would be great candidates. Further these firms can benefit substantially from the additional cash to expand their infrastructure!

This expansion would benefit Kenya by improving the movement of essential goods & services thus underpining the economic growth Kenya needs.


bankelele said...

Kenya Re getting ready. Equity available today also. I think Kenya Pipeline it too politicaly lucrative to have its operations exposed to a public listing

Kudrinketh said...

Very smart for ScanGroup to came out with the wonderfull news of 500% oversubscription on the day EQUITY begins trading.This ensures that the bar is set so high for EQUITY ,and that ScanGroup will be waiting to reap if that bar is not reached. I knew i liked the SG management.

coldtusker said...

@kudr - There is no "bar" here for Equity coz in Dec 2004 they did a private placement at 132/- then gave a a bonus of 4:1 (1 "pre" share = 5 "post" shares).

Thus the 26/- share is now 158/- (6x) in value!

Kudrinketh said...

I aint touching Equity even with a long pole, waiting to buy after the big crush however long it takes.I suspect we may have to wait 2 yrs when the directors can start selling their shares coz i dont see these farmers immobilizing their shares anytime soon.Meanwhile there are lotsa fish in the pond aka Kenya Re,Telkom, Mumias.

coldtusker said...

@kudr - I agree.

The folks buying at 160/- are going to see their returns stagnate coz Equity has to grow profits 25% per year for 3 years to get into the "regular" P/E range!

By 2009, the "larger" shareholders will be able to take profits by selling which will put a cap on the price.

Save your chumas for Kenya Re, KPA, KPC or others.

Kudrinketh said...

Talking about future IPOs,Ntalami announced that CMA expects four new listings before the end of the year.

Now i know of ScanGroup and Everedy,could the other two be state owned Kenya Re and Telkom? Anyone got any clue coz we need to position ourselves for the upcomming IPOs.

Ig-know-rant said...

4 more listings before the end of the year will be an overkill inasmuch as Kenyans pockets seems to be swelling with a lot of chums. I'm not touching Equity yet, the demand/supply relationaship ain't working here... I'll wait. Eveready is also a no, no. For SG, I applied for 25k shares and from the math, it seems I'll have to wait for a refund check!!!

coldtusker said...

@kudr - He should have mentioned which 4. It is highly UNLIKELY they will have 4 before year end.

SG should NOT count among the 4 since it is already over...

Chances are ntalami will count SG & Equity thus only 2 more.

Apart from Eveready, I have no idea! Even then they have been getting bad press. On the face of it, I would not buy a Merali IPO but let's wait for the prospectus.

@Ig - Equity went too high, too fast. Just wait till the newly immobilised shares hit the market over the next 8 weeks. Crash & burn!

Eveready - Eyes wide open!

Anonymous said...

how about we setup an online petition to list henya pipeline and safaricon. i think it would eb unfair if saaricom and pipelien are listed when theer growths flatten

Kagz said...

I expected this kind of oversubscription.

I am in "Investing on the NSE 101" so please xcuse my ig-know-rance...

-How can oversubscriptions be minimized?
-What happens after an IPO is oversubscribed.

Kagz said...

someone sent me this link...

it might be useful to you or your readers.

NO INVOICE this time coz my bible says, "freely you have been given so freely give" :)

propaganda said...

Coldtusker: I believe it's four listings before end of the govt accounting year (ie June 07) not before the end of the kawaida year.

coldtusker said...

@props - Thanx.

Why would Ntalami use the term (Fiscal Year) since the government is NOT the only one that is involved in listing firms?

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