Wednesday, May 21, 2008

Details on how ordinary Kenyans got screwed in SafCon's OFS

Morgan Stanley (MS) & their local partner (Dyer & Blair) had sole rights to advertise and promote the SafCon OFS abroad. By bidding 5 cents, D&B became the Transaction Adviser (TA).

A conflict arose since the TA is also a stockbroker and placing agent. D&B advised that MS gets sole rights for foreign applicants. D&B then shares in the profits made by MS. So the 5 cents is elusive i.e. it cost Kenyans far more than 5 cents. it cost them billions!

MS could choose who they wanted to participate in the OFS. They could reject an application for any reason they deemed fit. They also could peek at the applications from other brokers thus allowing their clients (& themselves) to adjust the bids as needed.

Question: So what happened?

Answer: Well, MS picked applicants who were in their good books. This means THEIR clients who provide high-priced MS with business. Some of these applicants were 'connected' to the political establishment so while the ordinary Kenyan gets 30% of the application, MS+DB 'clients' could get 20%-35% unhindered!!!

MS could also buy for their own books meaning they reject valid applicants who offered more than 5.50 to leave the field clear for them.

Question: Why was 20-35% of a firm with 99.9% Kenyan subscribers & revenue being sold to foreigners who contribute little?

Answer: Well, it was a payback for political support. Coldtusker was NOT invited to participate! Many Kenyans would have willingly paid more than 5.50 ( including yours truly) for the 20-35% that was offered to the foreigners. It turns out there were applications/bids at 6.50 but 5.50 was chosen to benefit the so-called 'foreigners'. Therefore, at the MINIMUM, Kenyans lost (2bn shares x 1/-) KShs 2bn. The 1/- is what the real market would have paid above the 5.50 the GoK accepted.

If the allocation to foreigners was 35% then the loss could be KShs 3.5 bn.

Many Kenyans borrowed and had to pay upfront while the 'foreign' (in parentheses coz these foreigners were simply a front. There is NO scrutiny of they are!!!) applicants pay AFTER the allocation!

Equity was lending at 18% pa + 3% commitment fee.

10,000 shares@5 = 50,000. The issue closed on 23 April but refunds will be disbursed at the earliest on 10 Jun & clear 4-5 days later thus 60 days of interest on 50,000.

50,000 x 3% = 1,500
50,000 x 60/360 = 1,500 (Most banks use 360 days per year when charging interest)

allocation of 30% = 3,000 shares

Cost of 3,000 shares = 15,000 (for the shares) + 1,500 (Commitment Fee) + 1,500 (Interest) = 18,000
Cost per share = 18,000/3,000 = 6/-

The losses will run even higher than what I have shown above if the price of SafCon exceeds 6.50 per share - which is likely.

A pity but Kenyans continue getting screwed... royally screwed...

Wednesday, May 07, 2008

Kenyans get royally SCREWED by Safaricom

Hear it here first!

Kenyans were taken for a ride by dyer & blair, morgan stanley, GoK crooks...

The foreigners - favoured by the idiots who set up the OFS- will pay KShs 5.50 for their shares!!! Yes, a mere 50 cents more than what wanjiku paid!

If I could get all the shares I wanted, I would have paid 6/-, let alone 5.50!!!!! So would have 1,000,000 other Kenyans.

I am pissed that the Kenyan government either got taken for a ride OR there was oddles of CORRUPTION.

Anybody interested in knowing how we got taken in?

Friday, May 02, 2008

Africa & the Wall Street Journal

The WSJ is taking a belated look at African stockmarkets.

Ryan Shen-Hoover (www.investinginafrica.net) has a paid - worth every penny - newsletter focused on listed firms on Sub-Saharan African stockmarkets. I have a subscription & have picked up a gem or two. If you contact him and say the magic words "I am an African investor and I read coldtusker's blog" he (might) give you a discount. No, he is not paying me but please sign up in droves so I can angle for a 'free' renewal. Please mention COLDTUSKER. You will need a Visa/Mastercard and its billed in US$. No, I will not lend you mine.

Subscribers also get access to hard-to-get financial reports for many listed African firms.

Anyway, here is the link to the WSJ blog.

Another firm highlighted in the blog - apart from Investing In Africa - is www.africanshareholder.com which has great info on African firms. Free. I would pay for it. Just don't tell them!

Pluses & Minuses - Kenya's growing pains

NEGATIVE: The unaccountability of how tax revenue is spent continues unabated. Plastic manufacturers who pay 120% excise duty want to see the funds used to clean the environment. Makes sense but I think its being used to but new cars for the bloated cabinet!

POSITIVE: Another broker is licensed though not admitted to the NSE. We need more competition. Chartered Capital used to be Town & Country. CCL belongs to Chase Bank. James Gachui (of Trancentury) is a shareholder of Chase Bank.

NEGATIVE: Allegations of insider trading of Equity Bank shares.

POSITIVE: Kenya gets $10mn from EU to boost tourism. Of course, most of it will be spent in the EU promoting Kenya.

NEGATIVE: Nairobi's 'planning/zoning' is thrown out of the window as residential areas turn into commercial areas. Smells fishy to me. What say the Nairobi City Council?

POSITIVE: KCC is now profitable and likely to go public in 3-4 years.