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"...

US Style electioneering is here... (with some violence)

Wow, the Kenyan political scene is heating up...

I do not enjoy politics BUT politics in Kenya has a substantial effect on the economy... thus I am taking a look at the current presidential electioneering...

First, a "banned" campaign video clip/ad on YouTube.

• Why would the gov't ban the video when the pics/video are in the public domain? (OK, seeing Roocy in PJs in public is not for the faint-hearted!) The internet allows Kenyans to see it anyway... many have the clip on flash disks & e-mails are zipping around...
  
• Or is the claim of a ban merely a hoax/marketing strategy by ODM? (Dick Morris at work?
  

The Domo Domo clips are smart... and subtle... showing the failings of kibaki's govt esp ANGLO-FLEECING.

The PNU clips show "progress" but PNU should be warned that BJP (India) lost the elections - even after 8% annual growth - while their slogan "India Rising" coz the rural voters felt neglected in favour of the Urbanites. PNU is unfairly hurt by "poor economy" perceptions. It is not their fault that oil prices have hit high levels thus an increase in inflation. Furthermore, there has been visible development in many parts of the country. Of course, dan "the idiot" moi screwed up Kenya that there was no way but up!

The anglo-fleecing scandal has scarred kibaki. That is a black eye however you slice & dice it. Why did he tolerate the corruption in his cabinet/government? If not for Anglo-fleecing, kibaki was a shoo-in! Kenyans do like him... kibaki's association with dan "the idiot" moi is unfortunate esp when goldenberg happened during moi's watch. Anglo-fleecing started under moi. Then there is Turkwell & the Mobitelea issue. moi is a thief. Period. He should be prosecuted NOT feted!

ODM can't claim to be the party of "clean" with the myriad crooks they have on board including ruto(yk1992), gumo(times tower land "allocation"), etc! There are many more... I think the crooks on ODM/Raila's bandwagon will hurt him... He should have taken the bull by the horns & refused to co-operate with the crooks! Most ODM politicians served in either moi's or kibaki's government including Raila (albeit not for long).

Second, a 'Dick Morris' hired by ODM. Wow, they are serious considering Dick worked for clinton in 1996. BTW, the clinton administration has the dubious distinction of having the most financial scandals in recent American history e.g. travelgate, whitewater, etc.

Will PNU hire a "spinmeister"? I bet they will!

Third, the placement of posters on cars, buses, pillars, highway dividers, public bathrooms, etc!!! It pisses me off that the cities, towns & countryside are littered with these posters!

Why don't we have public debates on TV & Radio where we can read about issues/policies rather than the ugly posters everywhere?

Billboards - some tasteful - are OK since they are ads which will come down soon esp after elections. The posters are an eyesore.

Fourth, terms such as "kumbafu", "adui", etc dominate the little news we get on TV or Radio. Funerals are political events not for the dead or their families but the politicians.

We need to have PUBLIC DEBATES by the presidential candidates instead of mudslinging all the way! And this leads to violence e.g. Kisii, Kuresoi, etc. Since nyachae is a PNU supporter, he remains free... even after publicly advocating violence. If ODM wins, I think nyachae should be prosecuted for "incitement"...

ODM supporters are not shying away from violence either. When will it end? I fear the Taliban (pro-ODM/Raila) & the Mungiki will clash before the elections with horrendous consequences.

Ali (police commish) is disappointing Kenyans... How can he "ban" the singing of the National Anthem. It is my RIGHT to sing it while taking a crap, showering, hiking or to put kid/s to sleep.
The police are supposed to be non-partisan. Their job is to enforce the law not make laws. Period!

Fifth, tribal politics flare up.

• Accusations are flying that PNU is a "GEMA" outfit with the Kikuyus leading the way to re-elect one of their own. It is a fair observation because even Uhuru Kenyatta (the supposed "leader of the official opposition" & a Kikuyu) roots for the incumbent!
  
• Nevertheless, there are many other supporters of PNU from various other tribes/regions. All is all... I think tribes & tribal politics should be a non-issue. Merit should be the primary factor BUT the reality remains... Kenya is composed not of Kenyans but of tribes.
• Raila single-handedly controls a HUGE block of the Luo vote regardless of his performance. That is sad.
  

Sixth, the gov't (PNU-led) is doling out goodies & promises like there is no tomorrow. That is unfair to the opposition & Kenyans. Where was the gov't during the past 5 years? The traffic in Nairobi is horrendous, basic services have no improved substantially & the road network is atrocious. Even economically significant areas like Industrial Area have seen little improvement of the roads.

KAA under george muhoho(hoho) is a joke. KAA is woefully behind schedule in upgrading Nairobi's main airport. The Kisumu airport had to be shut down when the runway was washed away. And the idiots at KAA claimed it was 'safe'...

ODM's "luminaries" have little to show for development:

• Ngilu's hare-brained "universal healthcare" plan which was simply an over-burdening of Kenya's private sector.
• Balala did a fine job in Mombasa as mayor.
• Mudavadi was a competent Finance Minister.
• william ruto was part of an amorphous corrupt aoutfit known as yk1992 which campaigned for the then thief-in-chief, dan "the idiot" moi.
• Raila... he was in gov't for too short a time to make a difference but his silly comments about forcing KQ to ferry khat/miraa was uncalled for. KQ is PRIVATE. The GOK owns less than 40% including shares owned by Treasury & NSSF. Let KL M & KQ's board run the airline. Raila should stick to what he (thiks he) knows.
  

Seventh, opinion polls, opinion polls & more opinion polls...

I could go on & on... I have not made up my mind which way to go... but I am watching closely...

P.S. Kalonzo... now I believe he made a "calculated" mistake in quitting ODM.

• Was he bribed to quit ODM thus break it up?
• Is he angling for a powerful coalition position?
• Will be "quit" the race before elections & defect/support PNU/kibaki?
• All in all... he might turn out to be the 2nd most powerful politician in Kenya! Or a king-maker...
  

AND WHY ALL THE ABOVE FOR MY FINANCIALLY INCLINED BLOG?

1. How will all this election &/or election rhetoric affect the business/economy of Kenya?
2. What of the NSE?
3. What of the confidence in Kenyan economy?
4. What of tourism?
5. Will inflation jump coz of elections spending & "goodies" dished out?
   

Sabbatical

COLDTUSKER needs a break. A long break. On 23 Sep 2007, coldtusker shall hibernate for a few weeks.

Please feel free to post questions/comments since there may be periods where coldtusker needs a cold one & shall break his (temporary) vow of silence.

Coldtusker has played with the idea of entering politics because he is tired of most Kenyan politicians who tend to be greedy, silly, thieving, conniving, sniveling, etc.

He thought he would be a breath of fresh air but like many of this ilk, he is pragmatic, & feels better suited to work behind the scenes. Since politics in Kenya is based on tribal lines & Kenyan voters have not matured enough to place "Nation" & "Merit" over tribe, Kenyans will continue getting the get the government we deserve.

I hope my vote counts toward the good guys.

Cheers!

More Corruption?

Sometimes the unlikeliest sources uncover corruption!

Business Daily ran a story about the GOK moving towards issuing new driving licenses. I always wondered why GOK sticks with the old "booklet" system!

Now I know why!

The new cards are expected to save the State at least Sh100 per driver that is spent on printing of paper renewals every year. Philip Langat, a deputy secretary in the Ministry of Transport, says it costs Sh500 to produce one of the red booklets.

Yikes! We have thick textbooks that cost less to produce! We have micro-processors that cost less! We can buy SIM cards for less! We can buy 256 KB flash disks for less!

Or is someone skimming off the top?

Rights Issues - For Non-Shareholders

OCHL RIGHTS ISSUE: PURCHASE OF RENOUNCED RIGHTS BY NON-SHAREHOLDERS

The potential investors who are currently not shareholders will have to buy the renounced Rights from the Secondary Market. Please note this ended on 14 Sep 2007.

The following sums up the general process flow:
1. Non-shareholders should approach their Agents and, if they are first time investors, they will be requested to open CDS Accounts as per normal procedures; Completed
2. The investors may then order and buy the Rights from the secondary market; Completed
3. The new investors will then raise payment for the Rights through their Agents; Payments due by 28 Sep 2007.
4. The Agents will deliver full details of the sellers and buyers as well as the payment for the Rights to KCB. The details so submitted should be in the form of schedules disclosing the following;
a. Full Names;
b. National ID or Passport Number;
c. Full Contact Details;
d. Number of Rights transacted;
e. Payment made/due; and (in respect to the seller);
f. The shareholder’s member number;
5. KCB will observe all the banking and batching procedures before delivery to CRS;
6. CRS will debit the seller’s (existing shareholder’s) account as well as create and credit the new investor’s account with the transacted Rights.

If you are still unsure, please contact Rina Karina of Faida Securities.

Rights Offers - How they work

Dexter , a reader, said...

Sorry CT for being a pain. One more question, there's somewhere on OCHL website which says that, the 28th of Sept. '07 at 3.00pm is the last day and time for acceptance and payment of new shares. What does this mean? Dexter - not at all. I am happy to help. Others are asking similar questions since many brokers are clueless esp regarding Rights that were purchased. #s 10 & 11 are relevant to you.

What the Rights process involves for investors

1 - Board decides/agrees the Firm wants to raise cash. They could take on debt but that might not be possible or desirable so they choose to issue Rights which allows existing shareholders to apply for additional shares at a (normally) discount to the market price. Most Rights are exercised for cash or cash equivalents.
Uchumi suppliers could apply their outstanding invoices to exercise the Rights instead of cash. This is a "cash equivalent".

2 - An announcement that the Firm plans to issue Rights is made but details are not always released. Some firms may indicate how many Rights they plan to offer at this stage.

3 - An application is made to the CMA. The application also includes a pro-forma Information Memorandum. Many firms announce the number of shares they plan to issue/offer. Some may announce/set the price at this stage as well.

4 - Firms announce the price for the Rights. This information is also submitted to the CMA. The price is often based on past trading of the shares. It may be 3-6 months' average price. The process is dynamic i.e. steps 2 & 3 may run concurrently. NIC has announced the price of 70/- but have not issued a timetable.

5- If the CMA approves the Rights Offer, a timetable is published that informs the investing public of the crtitical dates.

6 - An Information Memorandum is produced which has to be approved by the CMA. This is distributed to the shareholders who also receive their Provisional Letter of Allotment (PAL). The CMA does not "guarantee" the Rights Offer nor do they perform an in-depth due diligence.
The CMA was unfairly blamed for Uchumi being allowed to raise cash from the public but unless there was fraud - the bulk of which happened before the Rights - it is the Buyers who need to be aware of what they are/were buying.

7 - The shares officially trade Cum Rights. Buyers of these shares are entitled to the Rights issued through a PAL. DTBK & NIC are in this stage of the process.

8 - The Rights start trading on the NSE for a pre-determined period. The shares trade Ex-Rights. The OCHL Rights traded for 2 weeks from 3-14 Sep 2007.

9 - After the Rights cease trading there is a "break" to allow reconciliation of the Rights so the buyers are assigned the Rights from the sellers.

10 - The Rights need to be exercised i.e. payment for the shares needs to be made. The Rights lose all value if not exercised. OCHL's rights "expire" at 3 PM on 28 Sep 2007 .

11 - The payments are made through a broker or directly to the Receiving Bank using a Banker's cheque. The cheque should be for the exact amount (Rights' Exercise Price x Number of Rights) and the PALs usually have the amount payable filled in. Because of the time limit, do not delay & since most Offers close on Fridays, play safe and do it early.
I prefer submitting the form directly to the Registrar or Receiving Bank who will check for errors on the form. They will only accept a Banker's cheque.
An additional benefit accrues, there is no commission payable to the broker by the Firm. The Firm is YOUR Firm so any expenses paid by the Firm are paid by you, the investor.
Always insist on a receipt from the Registrar, Bank or Broker. OCHL's Registrar is CRS located in Bruce House. KCB's shares office is located in Kencom House.
If your broker does not know what they are doing, go see Faida, Standard or Tsavo who were involved in the Offer as advisers.

12 - The Rights + Payments are "converted" into shares. The shares are credited to those who exercise the Rights. An announcement is made regarding the level of subscription. If over-subscribed then the allocation methodology is announced. Unlike an IPO or OFS, buyers are guaranteed as many shares as the Rights they exercised.

13 - Refunds, if any, are dispatched. The CDS accounts are updated while others may receive certificates.

14 - There is a pre-determined date when the "new" shares can begin trading. The original shares can continue trading throughout this process.

Olympia Holdings (almost) home & dry...

(Updated blog post with the latest trade information) Olympia Holdings Capital Limited's CEO, Michael Matu, indicated in an interview that he is confident the Rights Offer will be fully (100%) subscribed. There have been substantial trades of OCHL Rights on the NSE over the past week accounting for almost 30% of the total available Rights. 10 Sep - 272,200 11 Sep - 5,170,200 12 Sep - 329,000 13 Sep - 3,035,694 14 Sep - 3,655,040 The above totals 12.5mn Rights which equals 42% of the total Rights made available to the market. Add the sales in the first week & it exceeds 45% of the Rights available. The assumption is that the buyers of Rights will exercise them since they would not buy them otherwise! There may be a few "traders" but I do not believe the numbers are insignificant. The price of OCHL shares has stabilised at 16/- but the immediate future depends on the 1H 2007 results. The price could rise IF the results are better than expected. OCHL had made a small loss through 30 April 2007 (4 months of trading) since there were costs related to the acquisition of Plush-Yokota. Details of the additional expenses/losses were not provided in the Information Memorandum. Olympia rights issue to be fully subscribed Story by WACHIRA KANG’ARU Publication Date: 9/14/2007

Olympia Capital, a Nairobi Stock Exchange listed company, says it expects a full uptake of the additional shares it is selling in the market by the close of today. It is seeking to raise Sh420 million through a sale of rights to its shareholders at a price of Sh14 for 30 million shares. The news came with an announcement that the holding company has increased its investment in the Botswana subsidiary by a further Sh82 million, as it seek to take full control. “We have just purchased seven million shares in Olympia Botswana, which makes us now a 49.5 per cent shareholder,” Olympia Capital chief executive officer, Michael Matu revealed in an online interview. “We will buy another one per cent in the market to give us control.” Olympia recently acquired a South African firm, Plush (Property) Limited through its Botswana subsidiary. It also owns Dunlop Industries a manufacturer of plastic tiles in Nairobi, and Kalahari Floor Tiles and Gaborone Enterprise in Botswana. The seven million shares were brought at 1.10 pula (Botswana’s currency) per share, which translates to around Sh11.70 per share. Acquisition of full control in the Botswana subsidiary is one of the reasons the company is seeking funds through the rights issue. Olympia is confident that all the 30 million rights will be taken up by close of their last day of trading today. High demand “I am confident that it will be 100 per cent taken up,” said Mr Matu, citing indications from the major shareholders was that they would take up their rights in full. He also noted that demand for the rights is high among other investors, creating a market for those not taken up by their owners. “We have a situation where there are not enough rights in the market, I have been receiving calls for up to six million rights, but we have no sellers,” he added. Apart from raising the additional capital, the issue is expected to expand the company’s shareholder base from the current 1,200 members.

The Nairobi Stock ATM... Olympia, Diamond Trust & NIC

The Olympia Capital Holdings Rights Offer comes to a "close" on Friday (14 Sep 2007). The Rights will stop trading on Friday but the exercise date is 28 Sep 2007 giving buyers 2 weeks to get their finances in order. They will raise KShs 420mn.

Barely after the close of the Olympia Rights Offer then Diamond Trust Rights Offer will start soon after the EGM on 1 Oct 2007. They will sell 23,291,015 shares at a yet undetermined price. As happened with the earlier Rights Offer in 2007, it is expected the Offer will be oversubscribed as well.

Then there is NIC Bank which plans to sell 16.5 million shares at KShs 70 = KShs 1,155mn. From the excitement shown for the shares on the market (selling at 175/-) it is likely the Offer will be heavily oversubscribed.

Barclays Bank announced a KShs 3bn bond offer today.

So all in all... the NSE cash ATM continues unabated whether it is an election year or not!

Olympia Rights in major trade

Olympia Capital Holdings has a Rights Offer pending. The final date for trading the Rights is 14 Sep 2007. The final payment date is 28 Sep 2007.

The current outstanding shares are 10,000,000 with 30,000,000 Rights on offer.

The regular shares trade volume is relatively low (see MyStocks for graphing) and if they trade 5,000 shares, it is considered a huge deal!

Therefore the total Rights traded today were 5,170,200 (yes, over 5mn)... Wow! That is 17% of all outstanding Rights on offer.

Generally when someone buys Rights, it means that they will be exercised. In comparison only 3,300 shares were traded at 16/- so there seems to be a bottom reached.

There are 3 more trading days for the Rights so let's see how this develops.

My Stocks

The tools offered by mystocks keep on improving. I am surprised the site is still free for users. I would recommend using it while it is free!

The tools include:
- Portfolio Tracker
- Stocks Drill (basic for now)
- Graphing & comparison capabilities (including accounting for bonuses & splits)

I have some issue with the way the details on the live feed are displayed but I understand they are working on it. I like seeing "depth" on the trades.

There is a "mystocks+" that is geared towards corporate users.

Kudos to the enterprising Kenyan(s).