IPO - Initial Public Offering - The funds raised adds to the equity of the Issuing Firm
OFS - Offer For Sale - The funds raised is paid to the Sellers e.g. Eveready & Mumias (2006)
ScanGroup was a combination of the above.
Let me clairfy WHY I chose the position I took:
- Stanbic - Kenyans (among other non-Ugandans) were discriminated against i.e. they received a far smaller share of the OFS allocation. There is nothing wrong with the allocation since the Uganda government was selling its shares (10%) at a discount to "market value" thus it should favour its own citizens. It is their money after all!
- Therefore, the Kenya Govt, should, in the same spirit, give Kenyans preferential treatment in IPOs or OFS where the Kenyan Govt is selling its shares or an IPO at a discount to Market Value.
- Tanga Cement - Non-Tanzanians were locked out from the IPO/OFS. Valid, yes, but unfair to other East Africans in the spirit of EAC.
- Therefore, the Kenya Govt, should, in the same spirit, give Kenyans preferential treatment. Shares will only be allocated to foreigners if there is an underscription from Kenyans.
- Allocation Criteria should be spelt out as I argued in the earlier post by create various classes for the applicants: Class A - Employees - as is they are always favoured especially in a new listing
- Class B - Kenyan Citizens - Since they "own" the government which owns the share so the ultimate owners (the citizens) should get priority
- Class C - Kenyan Residents - Similar argument to B except they are not citizens thus not as vested as citizens
- Class D - Ugandans & others who allow Kenyans to apply for IPOs, incl USA, UK, etc - Since they are part of EAC & have allowed Kenyans in their IPO/OFS (Stanbic)
- Class E - Everyone else (those who restrict Kenyans in IPOs, etc) - Includes the Tanzanians who locked out foreigners including Kenyans.
No, I am not picking on Tanzanians but they need to understand that ALL E.Africans need to cooperate for the greater good. Good progress has been made but nationalistic & populist politics still plays a nasty role. Kenyans can't give all the time while receiving little in exchange. Let's be treated as equals & with respect.
Tanzania for political reasons harassed Kenyan editors & journalists (Nation Media Group) for no good reason & on flimsy excuses! A successful partnership is Precision Air & KQ. KQ owns 49% of PAir while providing the financial & managerial backup needed. PAir has since become the largest Tanzanian airline & flies to the Mid-East while continously expanding its regional footprint.
Kenyans have discovered Uganda & Rwanda to be more hospitable. Increasingly, Kenyans are investing in these countries e.g. Uchumi, Bidco & Jubilee.
Uganda provided better benefits/conditions for Bidco than Kenya there Bidco opened a new factory & plantations in Uganda.
Private Firms (with no or little government stake) e.g. Eveready can do what they want in terms of allocation after all the Kenyan citizen's 'stake' is limited.