NSE Compensation Fund runs out...

The NSE & CMA Investor Compensation Fund might not have enough funds to cover losses in the event of another broker collapsing.

The issue here is FRAUD. If a client has shares then they are 'safe' with the CDSC but a client would lose cash & shares sold without their knowledge.

Solutions?

• CRIMINAL charges against fraud.
• Move to bank-backed brokers e.g. CFCFS & now NIC Capital.
• Move to strong brokers i.e. publicly published & audited financial statements like insurance firms have to do.
• Sell new licenses with 100% of the funds going into the IC fund.
  

It seems there is another broker on the ropes & several brokers are courting offers for sale or raising funds...

There are buyers for 'new' or 'clean' licenses but there is little interest in existing licenses.

Rumors (& that is all they are) have it that NIC Capital will raise more funds - from NIC Bank - to defray 'bad debts' & 'investor claims' accumulated under Solid Securities. Some NSE insiders claim NIC buying 60% of Solid saved Solid Securities since NIC Bank can't let NIC Capital falter...

kimunya - the sacrificial lamb?

Is kimunya being sacrificed by kibz using raila & wako?
When will he be resurrected?

It seems that the CBK - owner of the Grand Regency Hotel - is being let off scot-free.
Did ndungu support or oppose the sale in the opaque manner?

Who else was involved in the sale?
Did kibz know - rhetorical question!
Will raila use his position to make hay while the sun shines?
Will ODM get a say in the appointment of a new Finance Minister?

Will the MPs get away with paying taxes as the Executive panders/bribes to them to make GRH go away?

Notice how Martha Karua isn't her usual abrasive self defending kimunya, kibz, PNU or govt?

The committee has wako (PNU or however the wind blows but essentially KANU), orengo & omondi (ODM), kilonzo (ODM-K but a KANU guy) & ringera (more of a GEMA guy).

Kenya should go the India way & appoint a clean TECHNOCRAT as Finance Minister - not a repeat of saitoti!

Has Susan Mudhune resigned from KCB's Board?

According to the Nation Susan Mudhune the immediate former chairperson of KCB has retired. Or is it poor reporting by Nation? Or slow updates by KCB?

She still appears - as of 2 July - on the KCB Bank website as a director.

The only other woman to chair an AGM, for a listed company, was Susan Mudhune chairing Kenya Commercial Bank, but without the benefit of a woman chief executive. Ms Mudhune retired from the bank’s board last month.

Open Letter to all listed firms on the NSE - Grand regency Hotel

Dear Chairman/CEO/CFO,

I would like to request the Board not to hold any meetings, functions, AGMs, EGMs or provide any patronage to the Grand Regency Hotel as long as the sale does not meet prudent & transparent guidelines expected in the disposal of public assets.

The GRH relies on patronage from businesses as its core client base. The denial of the business is a silent protest in the vein of Gandhian philosophy as practiced successfully by Dr. Martin Luther King & Nelson Mandela. I hope this drive the message home to the corrupt whether they be Sellers or Buyers.

It is my hope that the Private Sector takes the lead in protesting unfair policies that the political establishment pursues.

Thank you,

Coldtusker

Grand Regency Hotel - IPO? Dreaming...

The GoK could have sold GRH to the public and make it a public entity... but there would be nothing there for the politicians... would there?

GRH with a market value of KES 3bn would have been larger than the market caps Unilever Tea, Kakuzi, Rea Vipingo, C&G, Marshalls, Sameer Africa, etc... It would have been as large as ALL the AIMS firms combined!

Of course, interested bidders for the management contract could have been Serena, Fairmont among others... but again what would kibz or kimunya have gotten?

In Zambia, Lusaka's premier hotel, the Taj Pamodzi, majority shares were sold to the Taj Group of India but it remains a public listed entity... It seems Zambia have better government governance than we do...

Who knows, KQ - publicly listed - could have taken a stake in GRH & marketed it as their exclusive hotel for its passengers & crew but would k&k benefit?

I am going to boycott the GRH unless it is (re)sold for a fair price in a transparent manner. I will urge ALL listed firms NOT to hold their AGMs there in protest at the farce.

Tsavo Securities plans to buy 51% of Crossfield Securities

I do not have additional details except as provided by Business Daily but this should be interesting... Nevertheless, is a broker really worth KES 600mn?

We need more details coz some of the funds might be used to add capital to the business as well. I wonder what Suntra is valued at...?

BTW, there is no value to Crossfield's business from what I have been told... so the price is merely for the license?

Despondency & the common Kenyan (wo)man

I counseled against a 'combined' EA presidency but seeing as things are in Kenya, I might re-think my position. Many Kenyans & Ugandans are of the opinion that Kagame would win hands down if he went head-to-head against the incumbents esp kibaki & museveni.

So what is happening in Kenya to warrant such sentiments?

• A bloated cabinet whose obscene expenditures have to be paid for by taxpayers have to foot... and not the MPs who go scot-free...
• A 'coalition' government that leaves little room for dissent...
• MPs who live off the fat of the land but who contribute little...
• Safaricom shares sold at a KES 4bn discount to 'local foreigners'... while Kenyans were denied the shares...
• Anglo-fleecing suspects back in Kenya coz their protectors & godfathers rigged themselves back into parliament...
• Pattni off the hook coz he 'gave up' the Grand Regency Hotel in exchange for an amnesty... though the AG denies it... the KACC is in support of pattni's stand...
• GRH sold though a 'secret sale' for a song... no public bidding... after lies and denials... all is back to normal business... i.e. theft...
• The Kenya Petroleum Refinery sold to the libyans giving them total control over Kenya's oil industry... Libyans will also control the Pipeline and OilLibya (one of Kenya's largest Oil marketers)
  

Am I the only one who feels betrayed by our 'leaders'?

Grand "Corruption" Regency

Where there is smoke there is fire...

The Grand Regency sold for a song (well... lower than an open bidding process would yield) according to James Orengo... the Minister of Lands...

And there is a different figure from a member of the grossly overpaid staff at KACC...

Can't he revoke the transfer?

City Trust & Business Daily goofs!

Errors Galore... Business Daily at it again! My comments/questions in RED... City Trust banks on I&M regional expansion

Written by James Makau

I&M Bank has assets worth Sh30 billion in Kenya. June 27, 2008: The star that once shone over City Trust Ltd at the Nairobi Stock Exchange (NSE) in 2007 seems to have dimmed, put out by low volumes of tradable shares that have led to stagnation of its share price at the local bourse. Actually... prices on shares with low liquidity tend to be more volatile... if there are trades... At the Alternative Investment Market Segment (AIMS) of the NSE, low liquidity and the lack of shares available for trading is the bane of firms , but this is one plight that City Trust had managed to side- step, making huge gains on its share price last year. Little is still known of the firm which at one point in 2007 had floored the MSCI World Index— a free float-adjusted market cap index used to measure global equity performance— by a massive 157 per cent. The press is allowed at AGMs... Did this reporter make the effort to attend an AGM? 'Little is known'... I think the reporters concentrate of the 'larger' sexier firms e.g. KQ, Equity, etc while ignoring the smaller firms then claim 'little is known'... But in a remarkable about turn , City Trust —a listed investment holdings company—has lived to the AIMS billing; trading a mere six times this year, with the price changing only thrice. The owners of City Trust, which is tucked away in the relatively quiet corners of the stock market, keep an equally low profile. Picture this. The company, with a book valuation of Sh220 million and market value of Sh781 million, has no office or employees. It has an office. Ask the directors. A shareholder asked them at the AGM & he was told where it is though by law all a firm needs is a registered office - which is at Kirungii for City Trust. The business of the day is run by two of the four directors of the company board with the full board overseeing the company operations. The board occasionally meets at the Livingstone Associates offices, Westlands to plan and transact the business of the company. Prime Securities Investment Trust Ltd is listed as the largest shareholder in the firm with a 49.98 per cent stake while local individual shareholders account for 29.48 per cent. Institutional investors control a 17.89 percent stake in the firm. And with a dormant subsidiary —Kenstock Ltd—and modest earnings compared to other firms listed at the bourse, City Trust rising share price is likely to remain a subdued affair, outshone by the likes of titanic debutant at the bourse, Safaricom. Erm, it's the Earnings Per Share rather than the Profit After Tax that is directly related to the share price. But there’s still hope for City Trust, one that of course makes investment sense for its shareholders. Analysts say that should a persistent investor willing to buy bits of City Trust over a long period of time to create a weighty portfolio, the consistent dividend payout from the firm is a worthy attraction. What the heck is a 'weighty portfolio'? The dividend per share of three shillings which is pocketed entirely by the firms shareholders is mainly attributed to City Trust’s stake in a rising star in Kenyan banking. So... if the firm's shareholders don't pocket the "entire" dividend, then pray I ask... who does... Of course, the shareholders get the "entire" dividend (except withholding tax)!!! Investment consultant with over 50 years experience of trading at the NSE Chandulal Shah in a previous interview with the Business Daily expressed the view that City Trust’s shareholding at Investment & Mortgages (I&M) Bank holds a crucial piece to the firm’s portfolio puzzle. With a stake of 11 percent representing 1.1 million ordinary shares in I&M Bank, City Trust is the recipient of a tidy sum in dividends from the bank .“This is an investment company (City Trust) where any dividend derived is paid directly to shareholders.” said Mr Shah. Actually, City Trust owns only 8.93% of I&M Bank represented by 1.94mn shares. This is public information if one reads their Annual Report. City Trust which is expected to release its half year results this month is set to pay out a hefty dividend that will top up the Sh3.10 payout issued to shareholders last year. I thought the 1H 2007-8 ended 31 Jan 2008 thus the 1H 2007-8 results should have been released by 31 May 2008 or they are in breach of some NSE regulation. Income statements for the company at the beginning of the year put the firm’s investments at I&M Bank at Sh171 million. Last year, the firm increased its investment portfolio to Sh185 million. In 2007, I&M Bank reported a pre-tax profit of Sh1.3 billion compared to Sh936 million the previous year. Following the steady growth and strong earnings derived from I&M Bank, the firm invested more funds in the bank, bringing City Trust’s investment to Sh185 million as at January this year. In March this year I&M Bank acquired 50 per cent shares in First City Bank (FCB) of Mauritius at a cost of Sh1.1 billion. The acquisition of FCB represents the bank’s first investment abroad and is viewed as a launching pad for its regional expansion. FCB is one of the 19 commercial banks in Mauritius licensed to do both on-shore and off-shore banking business. I&M Bank has assets worth Sh30 billion in Kenya and has 10 branches in Nairobi, Kisumu and Mombasa. The bank also announced a private offer for Sh600 million subordinated unsecured floating rate notes to shore up its capital base. Low Liquidity Even then, City Trust’s free float and tightly held share structure still have a major bearing on the firm’s trading price. With only 4 million shares listed at the Nairobi Stock Exchange, City Trust Ltd is one of the smallest firms at the bourse. But even with about 3.5 million shares available for trading; only a tiny fraction of these are actually traded. Hmmm... according to the 2006-7 Annual Report, City Trust gave a bonus & this increased the shares to 5.2mn. I got this info from the NSE pricelist... No rocket science here... With only a few thousand shares changing hands on a weekly basis, the low supply of City Trust shares at the bourse has allowed holders of the securities to quote high prices which are occasionally matched at the bourse leading to price distortion. Wait... the same article (this one) claims there were only 6 trades this year... but the above paragraph claims that a few thousand shares trade weekly. Since it is June 2008, I would say we have had over 32 weeks this year... ICDCI was in a similar case a while back before turning round are becoming one of the most profitable investment holdings firm in the country. What has low trading volume & 'steady' price have to do with a firm's profitability? Sameer Africa , Eveready , Unilever Tea trade much more than City Trust but are they as profitable? But one reason that market players believe is a key link behind City Trust’s meteoric rise is the possible share holder value derived from the sterling performance of its portfolio’s gem.

CMA's website

A friend has been trying to get information on or about the CMA but the website provides little or outdated information. There has been an improvements since I posted a rant about it.

Does this mean someone from the CMA reads my blog?

Anyway... so I checked the website out & whereas it looks better but there are problems with the downloads. The 2007 annual report would not open up & the message was 'a damaged file'.

No e-mails are listed so how does one get in touch with the 'powers-that-be'.

There was a complaints section but the complaints form was damaged & the complaints procedure was blankety-blank. Way to go...

I do hope someone from the CMA reads this & fixes it.

Does anyone have e-mail addresses for the head honchos there?