Over 18 billion shillings will soon be refunded to investors who will not receive the full amount of Kengen shares they applied for.
These include institutional investors and thousands of applicants who pooled in their savings, sold assets, or took loans from bank, employers, cooperative societies and informal financial groups. (Other Nairumoured would-be investors include a couple of MP’s who sat in a restaurant one night plotting how they would each buy a few million shillings worth of Kengen shares and one of Kenya Airways top 10 shareholders who cashed in most of his high-flying shares to repeat the process afresh with Kengen).
Where will the money go? Will banks call in their money or will some investors choose to repay their loans? With t-bills at about 7%, leaving the money in the bank will not earn enough to repay the loans. Will spurned investors continue to buy Kengen share at the market rate after May 19 whether it’s 10 shillings or 20 shillings per share? A quality share that trades at 12 shillings. is a rare thing in Kenya. Will they buy other similarly priced shares or take the refund and buy matatu’s or real estate? Brokers would love for the money to be used to buy other shares and the stock market could receive a significant boost. Or will they wait for the next IPO, probably in a few months time?