Category Archives: CDS

Nairobi Stock Exchange Fiddles

While investors burn or run

Fresh off the appointment of a new chairman of the Capital Markets Authority, the owners of the Nairobi Stock Exchange welcomed him with another pledge to:

-Cap broker ownership of the stock exchange (NSE) at 40%
– Reinforce compliance and supervision through implementation of a risk based supervisory approach yada yada yada…..
– Deal with the findings of the PWC Forensic Report on Nyaga Stockbrokers once the report is received from the CMA i.e. they officially haven’t seen it!

So they throw the ball back to the Government (to fast track the demutualization process – and what this entails) and the CMA (new Chairman to act on the report) while investors rush back and forth like headless chicken changing brokers in search of the one honest broker left in Nairobi, while also yearning to return to the good old days when share certificates were kept in bank vaults or under mattresses.

Kutwa Tuesday: July 8 Briefs

away from the Grand Regency

– CFC/Stanbic merger/takeover formalized: As at June 1, the combined banking groups had assets of 78.3 billion shillings [$1.26 billion], deposits of 55 billion [$888 m] and loans of 38.9 billion [$627m]
– EABS Bank is now Ecobank Kenya
– Business Cubs: Bank of Africa will launch a small business Club for clients.
Going international: building on the success of Safaricom’s M-Pesa, Vodafone will do money transfer between UK and Kenya challenging western union on phone transfers to India, Turkey, Egypt and South Africa (from Balancing Act Africa)

– Everyone lovers Safaricom; with 90% of the shares volumes since listing, the company has been added to the AIG index, NSE 20 and NASI indexes from July 1
– One month after Safaricom allocations, and despite paying an extra fee (30/= for a CDS statement) and making several trades, no new CDS statement has come in the mail

– KTN joins the morning show club with Sunrise Live – coming a few months after Citizen TV and Nation (NTV) with their ‘breakfast shows’
– There’s a new relaunched Standard newspaper out today with new layout – but their byline For Fairness, Justice, and Prosperity is straight out of Superman

– Sweden/China joint oil search: Lundin Kenya has bought a share of the field assigned to China [Block 9, Kenya].

– Having moved to cut out travel agents, Kenya Airways will next offer hotel and car booking online at their website
– Rift Valley Railways (RVR) will raise freight charges up 14.5% and will charge a fuel surcharge based on average diesel cost and US$ exchange rate from 1st august

– Kenya has no summer or winter, but the high court has a summer vacation from 1st to 8th August

Questions from the blogs
– A recap of the Kenya Re AGM
– Has tourism in the Mara recovered in 2008?
– Does EDGE or 3G after all?


Digital: KDN and the ICT Kenya Digital Village are offering free connectivity for digital villages and schools: the program targets rural cyber cafes and schools – who are willing to pay a set- up fee, and share some revenue earned with KDN

– The Barclays Bond closes tomorrow (9/7)
– KCB rights close on 18/7 – so far only NBK has offered loans for KCB rights (up to 90% finance)

– EABL: logistics manager, governance improvement manager, group audit & risk manager, application support analyst, procurement managers (2). Apply to
– The electoral commission of Kenya: registrar of political parties, internal audit manager, finance officer. D/L is 23/7 by snail mail
– Captains of B1900 C and D at executive turbine. Apply through
– Film commission of Kenya: head of programmes, hear of HR & administration, head of finance, Programmes manager, marketing assistant, legal assistant, ICT assistant, executive secretary. Apply to by 18/7
– Keroche: distributors, area sales representatives. Apply to by 11/7
National Oil Corp of Kenya: risk analysts, internal audit assistant, procurement analysts, supply analyst
– Executive director of the privatization commission which became operational in January 2008. Apply (through deloitte) to (22/7)
– Resources manager at the Rockefeller foundation. Apply (though KPMG) to by 11/7

Marie Stopes: deputy director of male circumcision project (africa) [location: zambia} and male circumcision partnership deputy project manager [location: zimbabwe] d/l is 19/7

Rhodes Scholarships (2) for Kenyans. D/L is 31/8
– World Bank young professionals program. D/L is 15/7

IPO Train: full on board

It’s now the fourth official day of the Safaricom IPO, with some banks and brokers working over 7 days processing applications. And, over the weekend, many of the negatives of the IPO turned into positives;

Politics align: The IPO was launched last Friday by President Mwai Kibaki, who placed a personal application for 1 million shares, worth 5 million shillings ((0.01% of the shares on offer) . Since then the ODM side have also changed tune of the IPO matter, as they realized that as leaders they have to guide their people – and one of the ways to do so is to enlighten them on opportunities of wealth building and methods of advancement beyond agricultural and real estate productivity. Why tell people not to buy shares, when other communities buy the shares? What do you want your people to do? In any case the public holds minority stakes in most NSE companies with over half the shareholding hidden behind other companies whose shareholders are not well known.

Competitive sisters: Kengen was a watershed IPO but that was 2 years ago. The last massive regional IPO was Stanbic Uganda – how do they compare?

Company; Stanbic : Safaricom
Target; (Ushs 70 billion) USS$ 38 million: (Kshs. 50 billion) US$ 770 million
Beneficiaries; Standard Bank (SA) & Government of Uganda ; Government of Kenya only
Shares on offer; 1 billion shares : 10 billion shares
Share price; (Kshs. 3) $0.04 : (Kshs. 5) $0.08
Oversubscription 3 X : (2X is a conservative estimate)
Applications: 37,000 ; (1 million expected)

Animal Metaphors: We now have CNBC Africa which has been live for about a month and it’s a great channel to watch especially late at night, when they are covering Asia or American markets. Last week, they were discussing the US banking crisis and one analyst used the Sherlock Holmes tale of the dog that did not bark in the night to reflect on the silence of Japanese banks that were heavy investors in US mortgage securities but have not declared any losses.

The animal metaphor with Safaricom – is the elephant in the room which everyone is ignoring and that is Vodafone (UK): Did they want the IPO? I doubt it – they are not making money from the IPO, and will go from having a cozy boardroom, to having a million shareholders (estimate) demanding phones and umbrella’s at AGM’s.

– They are reluctant partners in this who for the last three years (and long before Mobitelea became a Matatu name) they had tried to buy 9% or 11% of Safaricom from the Government of Kenya, for a figure far less than the Government will raise from the public. Vodafone will remain the largest shareholder with 40% (or 35%) to GoK’s 35% , and retain veto power over business plans, budget, and CEO & FC appointments. But most companies listed on the NSE have parent companies who find it prudent to retain at least 50% of the company’s ownership to control the strategic and management direction of a company – and could they be buying any floating shares out there after listing? They can own up to 60% of Safaricom.
– It has exposed the embarrassing practices that gave rise to Mobitelea

Will stockbrokers’ change?: The only smudge so far has been the past performance of stockbrokers. It is sad that the lines outside Nation Center (of Nyaga Stockbroker clients) is as long as that any broker/banker I have seen this week. Stockbrokers have put out their best clothes, advertised and got new staff to woo investors for the 1 billion plus shillings ($15 million) commissions from the IPO – but what happens after? Will they revert to their dark old ways of insider trading, and secret share dealing? An ominous story from the Nation goes that one of the most interesting but unconfirmed anecdotes at the bourse is that Nyaga Securities managing director Patrick Gakiavi actually attended (as a director) the NSE meeting that decided to pump Kshs. 100 million into his operation. – and that joins the NSE urban legend archive like the one of the CEO who was able to cash out his significant stake on the last day of Uchumi share trading

Modernization to eliminate rogue brokers: The central deposit settlement corporation (CDSC) is seeking an SMS solution (mobile phone messaging) to alert investors on their account share trades (theirs/by rogue brokers) and also respond to client requests. (Deadline is April 9) The laws have already been amended to allow them to collect 30 shillings from each Safaricom applicant for postage and this will probably continue for any statements thereafter – as investors will be eased into the cheaper option of SMS (maybe at 5 or 10 shillings per message)

Beyond Safaricom: Hisanet Africa recommend that investors look at some other shares of interest amidst the IPO: these include NIC Bank, Kengen, Barclays (who are now expanding into Rwanda), Access Kenya, and East African Cables.

CDS expands

The Government will implement a scriptless securities settlement and central depository system for private listed securities and government debt instruments through the FLSTAP program.

Info for shareholders

At the end of the E A Cables AGM, Peter Waiyaki, chief executive of the Central Depository & Settlement Corporation answered questions on the new system of trading shares on the Nairobi Stock Exchange (See linked article: NSE’s New Way of Doing Business) He mentioned that:
– Even if you don’t intend to trade your shares, you should open a CDS account. You can open an account, and not put your share in, as you wait for new opportunities to trade
– The Kengen IPO and future new offerings will be done though CDS only (no more paper share certificates)
– With CDS trading is faster (if you sell shares you broker should have your cheque within five days)
– one day you’ll be able to trade though internet, but now
– is confidential: only you, your broker and CDSC know what’s in your account
– if you want to transfer shares to a friend or relative, you still have to go though your broker and fill out transfer forms
– you can get old certificate back after immobilization, (some people like to hang share certificates in their office) at a cost of 500 shillings each
– with CDS, it is easier for you to pledge shares as collateral for a bank loan