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Wednesday, June 27, 2007

Olympia Capital Holdings Ltd Announces Rights Issue

Adding to my previous blog entries on Olympia...

To clarify for those unfamiliar with OCHL... OCHL is the Holding Company that owns manufacturing & trading assets in Kenya, Botswana & S.Africa.

15 June 2007: OCHL shareholders approved the increase in un-issued shares by 30,000,000 at the AGM. The new Year-end is Feb 28 thus 2007-8 will have 14 months of results.

26 June 26 2007: OCHL publishes a notice that the Board has approved the issuance of 3:1 Rights i.e. 3 Rights (“Right but not obligation to purchase additional shares) for every 1 share held. Weighted Avg Price rises to 20/-.

OCHL has 10,000,000 issued shares. If the full Rights are taken up then there will be 40,000,000 issued shares.

The indication provided was that OCHL plans to raise KShs 300mn thus the expected price is 10/- per Rights Share. This would a substantial discount to the current market price of 20/-. There may be substantial interest in the Rights under the circumstances.

During the AGM, the CEO indicated that OCHL plans to pay a dividend equal to at least 20% of the PAT for the 2007-8 year. Furthermore, there is the possibility of an extra dividend payout that was “declared but not paid” 5 years ago.

If the results of the SA subsidiary are consolidated then the turnover is expected to jump significantly to KShs 1.4bn (2006: 396mn).

Just like other “smaller” IPOs & Rights which followed “larger” IPOs, the Rights Period for OCHL is expected to be after KenRe’s refunds are, well, refunded!

Nevertheless, the KenRe Offer seems to be in trouble after the allegations that the CEO & CFO had been upto no good. Some reports indicate the CMA is studying the PWC report before it OKs the IPO.

CFC Financial Services had an ad about KenRe’s Offer thus it seems the IPO may open in early-mid July 2007. OCHL should close the Rights Issue AFTER the refunds for KenRe have been paid out. This may be tricky for OCHL to pull off since the KenRe Offer dates will be decided by GOK while the CMA might be reviewing OCHL’s Rights application thus OCHL “misses” the window.

As a rule, the GOK offers shares at a “discount” to NAV or “Market Value” during IPOs. Please note that Mumias Offer in 2007 was an OFS thus it was discounted from the then market price of 55/-.
The KenRe IPO/OFS will be hyped since the:
· GOK wants/needs the funds. Also mentioned in the budget
· “low” price will encourage retial investors
· GOK wants to garner goodwill prior to elections

Most stockbrokers & analysts expect a Ken-Re over-subscription regardless of the economics/financials of the Offer. This will lead to the inevitable refunds, which may flow, into NIC’s Rights Issue (expected to be KShs 1bn) or OCHL’s Rights Issue.

Most firms whose year-ends are on 31 Dec will have paid dividends by August thus providing additional liquidity for investors.

4 comments:

bankelele said...

According to Bdaily, we'll know about the Kenya Re IPO today.

OLympia seems to have become a Botswana/SA company with a minority interest in Kenya.

MainaT said...

That has been long in coming i.e. welcome back. What is Olympia planning to do with the rights issue?
Re Kenya Re, the price will be around 10-12, but regardless of all the issues (and they are many including restated 2005 results without any public announcement) will be oversubscribed by folks looking to make a quick buck.

coldtusker said...

KenRe announced... 240mn shares @ 9.50

Banks - OCC(B) is an associate as it stands since OCHL has only 27% ownership...

Pansys Silvaz said...

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