Category Archives: Kengen IPO

Bull market for Nairobi shares

The Kengen IPO has been a tsunami of sorts for the Kenyan financial system. First, it soaked up a record amount of cash – dragging down share prices and the stock market in the process as it soaked up liquidity in the market.

Now with subscribers getting at most 5,000 shares each of Kengen stock, over 18 billion shillings will be returned to investors. A recent Indian IPO survey found that 2/3 of investors used their IPO refunds to invest in the stock market.

The market has already started rising with smart investors already taking positions in everything and bidding shares up to record highs (ARM up 8, Kenya Airways up 7, KPLC up 6, CFC up 3.5, HFCK up 2.5, Mumias up 6, and KCB up 16 shillings today) in anticipation of selling them once the Kengen refund wave pushes share prices even higher later this month.

Where will the money go?

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?

IPO & Other News

A group known as the Faida Consortium (Faida Securities, ASHBHU Securities, First Africa, Discount Securities, Equity Bank) have opened a special Kengen IPO website.

More Bank ($)
CFC: (Was no. 9 in assets which increased from 17.2b to 20.9 billion in 2005). Customer deposits increased from 12 to 15 billion while loans were up slightly less from 11b to 11.6b. CFC is the only bank without a remittance business that has so far increased its fee & commission income in 2005 from 168m to 217 million. Pre-tax profit was up from 353m to 418 million, and the bank will pay a dividend of 0.84sh per share to shareholders after May 26, which is also the date of the bank’s AGM.

Diamond Trust: Was 12th in assets but has leap-frogged Stanbic as it assets grew from 11.6b to 16 billion at the end of 2005. Deposits were up from 8.8b to 13b while loans increased from 7.1b to 10.3b. Thanks to its western union partnership, fee & commission income increased from 215m to 363m. Profit before tax increased to 427m and the bank will pay a 1st and final dividend of 0.7 per share to shareholders after its AGM on May 26 at the Serena.

Stanbic: Was 11th in assets at the beginning of 2005 which it increased from 11.5b to 15 billion by year-end. Loans were up from 7b to 8.7b while deposits increased from 8m to 11.7b. The bank is among many other to see a reduction in fee & commission income for the year which was down to 272m from 294m (in ’04), and yet it still increased pre-tax profit from 145m to 440m.

Others

ARM: Kenya’s third largest cement company, Athi River Mining (7% market share) posted improved results for 2005. Turnover was up to 2.2b from 1.6b and pre-tax profit was up from 172m to 296 million. The company will pay a div of .75 sh per share after the company AGM to be held on 8th June at the Intercontinental.

Total Oil: Turnover increased from 37.9b to 40.5 billion in 2005, however pre-tax profit reduced from 932m to 798 million. The company will pay a dividend of 2.5sh per share (same as in ’04) to shareholders after their May 3 AGM at the French Cultural Center

Sameer: Bridgestone company still retain a 14.9% stake in Sameer Africa (formely Firestone Kenya) year after the partnership break-up.

Kakuzi: Another tea & coffee had reduced turnover of 1.11 billion (down from 1.2b) and the company went from a 2004 profit of 93m to a loss last year of 112 million.

Developments

  • A technical institute known as the Nishkam St. Puran Institute will be established in Kericho Town.
  • Dominion farms multi-purpose dam, aqua culture center & agro-industrial project will involve the reclamation of 17,500 hectares of land in the Yala river & Lake Victoria basin.
  • The meteorological department now has a website. Hopefully we can get accurate weather reports and mercenaries can know beforehand if freak rains will shut down Nairobi traffic again.

 

opportunities

Education

  • Islamic Development Bank offering qard hassan or interest free loans for KCSE graduates who intends to pursue medicine, communications, computer science, and engineering beginning in 2006 – 07. Apply by 15 April to the supreme council of Kenya Muslims P O Box 45163 Nairobi.
  • New Zealand scholarships (2) Kenya positions) at this site and deadline for applications is April 30.

music

  • Now closed was a chance to be an international young music entrepreneur of the year – details at www.britishcouncil.org/kenya.
  • Compose a 3 – 5 minute patriotic song and send it to comms@comms.go.ke by April 7 – win cash prizes, and a chance to perform on Madaraka day.
  • As part of the GJLOS reform program a consultant is required to coordinate a music/song campaign to mobilise popular support in the fight against corruption. Apply to the GJLOS program at KPMG by 21 April.

Other vacancies

nation media group: news director, programme producer entertainment.  Apply by March 31 to the group director HR, P O Box 49010 Nairobi.

pricewaterhousecoopers marketing & communications assistant apply to recruitment.ke@ke.pwc.com by March 3. 1

at various flower companies

  • head of section (physical infrastructure) at a flower farm in Naivasha. apply to DN/A 709 p o box 49010-00100 by March 31.
  • production manager at a flower farm in Naivasha. Apply to the advertiser p o box 66743 by March 30.
  • managing director Waridi Farm. apply to applications@waridifarm.com by March 26.

at various NGO’s

  • programme coordinator – Kwale at Action Aid. Apply to hr@actionaid.org by March 27.
  • concern worldwide systems audit/support officer apply to hr@concern.net by March 31.
  • chief executive officer (CEO) at the Nairobi central business district association (NCBDA). Apply to the CEO (huh?) at p o box 10687-00100 by March 24.
  • human resource officer at the Red Cross. apply to Pamela.mokaya@ifrc.org by March 31.
  • water resource specialist at the MDG center. Apply to c.Kenyatta@cgiar.org by March 31.

Manpower
For the following, apply through Manpower Services (K) P O Box 50736-00200 by 29th March

  • Electoral commission of Kenya: IT manager, Deputy IT manager

Water service regulatory board: Corporate service manager, Result services manager, Communications and public relations manager, Human resource manager.

All Kengen

What
All about the Kenya Electricity Generating Company (KENGEN) IPO through which it will transform into a public company that will be listed on the Nairobi Stock Exchange (NSE).

Opens: Monday, March 20
Closes: Wednesday, April 12
On offer: 659 million shares (par value 2.5sh) at 11.9 sh per share (minimum lot is 500 shares at 5,950 shillings)

How & Where to buy shares
All share buying now starts with the opening of a CDS account with any stockbroker, and after March 20, you can register and pay for your allocation of shares. In addition, several banks and credit institutions will even finance the purchase of Kengen shares.

Over the next month, all their offices will be full of investors opening CDS accounts and placing orders for shares. Customer service for retail investors is marginal at best at most stockbrokers, but it will be even worse during the IPO period as overworked staff rush to beat the deadline.

However, I have a bias towards stockbrokers/investment banks, which enable online account management and trading. These include;

Dyer & Blair
Faida
Francis Drummond

Why buy?
Some KBW analysis of Kengen here.

Pro: Kengen is already profitable, still a monopoly and energy sector shares are hot right now. E.g E. A. Cables, KPLC.

Con: Have a single customer (KPLC), is a capital intensive company that can be affected by drought, will still be 70% government-owned & prone to interference (e.g. KPLC), lopsided IPO that favours employees, and past large IPO’s have taken many years for investors to achieve high returns e. g. KQ and Mumias.

Still, the upside is good, but only as part of a balanced portfolio. I recommend an investment of not more than 1/3 of shares in Kengen, and every day I caution people who are setting aside their entire savings/investments to buy Kengen shares to, in addition, seek value in other companies as well.

In the week since the Kengen IPO was announced, other companies have lost their share values as follows; Express -14.29%, Rea Vipingo -13.82%, Sasini -13.04%, Housing Finance -13.01%, Sameer Africa -12.94%, Diamond Trust -11.73%, National Bank -11.45%, Athi River Mining -10.27%, Uchumi -8.66%, Total -8.28%, Mumias -7.88%, and Kenya Airways -6.91%.

What Else?

Shares of the new Serena will be listed on the NSE starting tomorrow (March 15).

March 8: From Dreams to Women’s Day

Dreams
One day I’d like to buy an airline for 5 shillings!

Kengen sucks
According to Jaindi Kisero demand for Kengen shares is dragging down other share prices as shareholders are cashing out other shares to build up cash positions in anticipation of Kengen opening on March 20.

Opportunities
How to go from blog writer to magazine writer ( from low culture). The humorous article also helps explain what the myriad job titles at media houses mean and show exactly who does what

Jobs Regional HR manager at the British Council Kenya. Details at www.britishcouncil.org/kenya and application deadline is March 17.

2007 elections: It was a pleasant surprise to find that the Electoral Commission of Kenya is now carrying out year round voter registrations, an exercise which used to be a closely guarded secret that was manipulated in the past to handicap election results. But nothing yet on overseas registration and voting.

Sponsor a starehe girl: At a cost of 65,000 (about $900) per year for everything. All cheques should be made payable to Starehe Girls Center P O Box 6847-00200 Nairobi.

Writing: The World Bank has launched an International Essay Competition for 2006. The Bank and its partners are inviting young people 18 to 25 years old to share their experiences and ideas on community work and participation in public life. The deadline for submission of essays is April 2 and finalists shall be announced on May 1 and invited to present their essays to the jury from May 29 – 30.

Bar talk
Men gossip as much as women after a few tuskers as we socialize in bars. Here are the gathering over one evening, with some names omitted.

– How can members of parliament take 5 month Christmas holiday? I have about 5 friends who are seriously planning to run for parliament in 2012.

– Even as Kenya and Sudan move to sign a trade agreement, the Kenyan side has let go the architect of the Sudan peace process.

– The Governor of the Central Bank of Kenya could face corruption charges following some allegations which are not new.

– How the latest multi year and multi-million shilling corruption awareness campaign is being handled by a company associated with the President’s buddy.

– how can someone suspeneded over corruption allegations be rewarded with a new job in charge of food security at the time when there is starvation in the country?

My contribution to women’s day is that the above mentioned corruption allegations may result in Kenya having it’s first female Governor at the Central Bank and first female chancellor at a public university.