Today’s debate on the KISS 100 morning show was whether the Safaricom IPO should be postponed to next year.
No dates have been announced but it was (and still is) widely expected to kick off on December 10.
Those in favor of a delay rightly argue that most Kenyans struggle from December to February with holiday bills (extra food, travel, gifts) and school expenses (in addition to January fees, there are new uniform and book costs as well) and their little savings will not be available even for this much anticipated IPO
They also argue that the December 27 election will be a distraction to investors who will be out of Nairobi.
Those in favor of the IPO taking place in December that, the fewer buyers the better, since it will be over-subscribed anyway and this will just give investors a slightly better allocation. They also argue that they have saved for this and should be rewarded for their efforts at being prepared for the IPO.
– The market is ready, and no marketing will be necessary for this IPO. Investors are ready to buy now, then deal with what they bought after.
– Timetable will be tight, but other countries are able to do it. Giant Indian bank ICICI’s June ’07 IPO ran for only four days and was over-subscribed on the first day.
– Stockbrokers say they are not, and have asked that it be delayed till next year, but they’ll just pay their staff extra to work overtime during the holidays (and hire temps/interns to plug the gaps).
– Banks have abundant liquidity and will have loan packages towards the IPO to lend out the day after any announcement is made
– A local financial firm CCS Financial solutions (not to be confused with CFC Financial services) has come up with a financing product (in conjunction with ABC Bank) that will also deal with the inevitable refund cheques. (Read more at Nairobist)
– A correction: NSE Chairman Jimnah Mbaru is not contesting for the Starehe seat in the upcoming elections.
verdict: As with Kenya Re, I advise readers to by pass IPO’s – but what are your views, to go ahead or not?