Thursday, November 29, 2007

Safaricom (maybe) coming...

First... SafariCon stays true to its name... truth in advertising is unknown to them... Customer Service is unknown... more later...

Now to their proposed Offer For Sale - not an Initial Public Offering that would raise funds for the firm - that will provide the current gov't with funds.

Rumours have been flying back & forth but the total value of the Offer could run from KShs 35 Billion to 60 Billion. Of this amount, healthy chunk 20-35% may be reserved for "foreign" buyers. My gut feeling is that it will tend towards KShs 60bn with KShs 35bn earmarked for "retail" investors. The balance will go to SafCon employees, dealers, foreign buyers, etc!

I think it is UNFAIR to sell part of SafCon to "foreigners" while Kenyans will be starved of shares. The mantra among the brokers is that Kenyans can't absorb 100% of SafCon. I say that is BULL****. After all it is mainly Kenyans (incl diaspora) & Kenyan residents who contributed to SafCon's success.

Considering the over-subscription for other shares e.g. Kenya Re-insurance & KenGen shows the capacity is there. KenGen raised KShs 27bn vs only KShs 8bn worth of shares offered for sale. All the GOK divestitures were oversubscribed including Mumias, albeit barely.

It is estimated there will be 1,000,000 CDS accounts opened by 24 Dec 2007 - elections be damned coz money beats politics! - & an average application of KShs 35,000 means a 100% subscription rate if the Offer is for KShs 35bn. SafCon has a huge reach all over the country & a low minimum application threshold will open the OFS up to many more Kenyans.

* Hundreds of thousands of Kenyans are prepared for SafCon's OFS with at least 10,000/- saved up.
* Tens of thousands of Kenyans have the "average" of 35,000/- saved up.
* Thousands of Kenyans have more than 100,000/- saved up.
* Hundreds have 10,000,000/- or more - going by Shareholder lists.
* Add the Kenyan Unit Trusts, Insurance Firms, Banks, etc who have 25,000,000/- & more to invest.
* Finally there are the E.African Investors who are treated as "locals". (Erm, unlike the Ugandans, the Tanzanians treat Kenyans as "foreign" investors, why do we allow them - Tanzanians - to participate as locals?)

Therefore, even if we had KShs 60bn worth of shares for sale... they would be sold, nay, over-subscribed if sold at the right "discount" to Kenyans.

I think SafCon should favour Kenyan, then the Ugandans, then E. Africans... before the "foreigners"...

6 comments:

bankelele said...

There are a lot of factors here:

The government wants as many Kenyans to buy in, but Safaricom does not want to end up with a million shareholders. The government wants to raise as much as possible, while still having the shares affordable – hence a split price will be possible with one discount price for Kenyans and the other for foreigners? But what about Diaspora Kenyans (who will not be here to queue with ID and CDS forms).

Yes we have the money, but the capacity is another matter: having a million people paying cash for shares will be a nightmare for the receiving bank, stockbrokers who collect applications, and the other 40 banks who will see their deposits drop for two months. Already Barclays has asked that shareholders not be required to pay for shares until they know their allocation
- It’s sad that Tz won't respect Kenyans as investors in IPO’s, should we reciprocate or try and persuade them to see the folly of their ways?

dexter said...

Court of appeal certifies ODM Safaricom IPO case urgent. I doubt if the OFS will take place this year. Your take CT please.

don said...

Tz not counting Kenyans as locals only goes to hurt their economy.

Tanzanians and Ugandans bring in money that boosts our economy (even though for a couple of months). Kenya should now just look into ways for keeping the money i.e. sell goods and services that have East African apeal.

One day they will realize, either way no skin of our backs.

coldtusker said...

Banks: Safaricom WILL end up with 1mn shareholders after the OFS regardless of the allocation to foreigners. The number of retail applicants will almost the same either way.

This will be Kenyans shareholding in a "mass-market" firm.

dexter: This might be a spanner in the works esp if the judge is ODM-leaning.

don: The Tanzanians should learn from the Ugandan experience where USE index has gone up at least 150% since Stanbic's IPO.

Maishinski said...

SAFARICOM IPO: BROKERS WANT TO TURN IT INTO A COMISSIONS RIP-OFF!

The mass market push by stock brokers is a scam. All they want is to get as much commissions as possible AT THE EXPENSE OF ORDINARY KENYANS.

Transaction advisors have major conflict of interest. They have to recover expenses related to their 5 cents contracts. The only way to do that is to have a large number of speculative and uninformed "investors" who will keep the comissions pouring in.

Keep in mind - the brokers get paid for both buy and sell transactions. The more speculation and instability the better for them!

The argument about kenyans sharing a piece of the "cake" is totally flawed and is meant to appeal to the "get-rich-quick" mentality of uninformed Kenyans.

Any windfalls will not be significant and grim reality will strike misled kenyans when the initial excitement goes down.

If the IPO targets the masses - ONLY THE STOCKBROKERS WILL GAIN.

This is a potentially massive scandal - and no one is seeing it!

Paul Merrill said...

I must say that as a foreigner, the motivation for me or another foreigner to buy Safaricom stock is generally quite remote.