Category Archives: Stanbic IPO

Shares Portfolio May 2011

Enjoying the fruits of some good 2010 performance in an uncertain 2011

Comparing share performance to three months and a year ago.

The Stable
Barclays Bank
Bralirwa Breweries (Rwanda) ↑
Diamond Trust Bank ↑
East African Breweries (EABL) ↑
Kenya Airways ↓
Kenya Commercial Bank (KCB) ↑
Kenya Oil Company (Kenol) ↓
Scangroup ↔
Stanbic (Uganda) ↑
Uchumi Supermarkets ↔

– Best performer: Bralirwa 11% (this Q), then East African Breweries 10%
– Worst performer: Kenol (-4%)
– In: Barclays
– Out: Safaricom
– Increase: Kenya Airways
– Decrease: None
– Performance: The Portfolio is down 1% in the last three months while the NSE 20 Share Index is down 7%
– Uchumi, which is out of receivership, has finally got the green light from the CMA to re-list at the Nairobi Stock Exchange, though the date and conditions of re-listing have not been specified.
– Safaricom’s 2010 results which will be released on May 18, are widely expected to show a drop in revenue and profit owing to the price wars in the mobile sector.
– Kenol resumed its battle the Ministry of Energy after a quiet period as motorists grappled with an unexpected shortage of petrol (This inspired an innovative site called Find Fuel . The Kenol AGM was live streamed and can be found on YouTube.

– Stanbic Uganda had reduced profits owing to bad loans combined with staff & IT expense increases.

Events & Outlook:
Looking forward to
– Dividend payments from Diamond Trust, KCB, Scangroup, Stanbic (Uganda), Kenol
– Bonus shares from Diamond Trust (1:5), Scangroup (1:5), and Stanbic Uganda (1:1)
– New share listings: There’s been no word yet from Transcentury and Britak. During the quarter, CFC-Stanbic spun off their insurance arm – CFC Insurance which is now listed on the stock exchange, and will soon to be joined at the NSE by CIC Insurance.

Why list?: The newspapers, this week had advertisements from the Capital Markets Authority (CMA) highlighting tax and other benefits of listing shares or raising capital in Kenya. These include;

Newly listed companies will enjoy reduced corporates taxes if;
(i) They list 20% of their shares, they will pay 27% income tax for the next three (3) years on profits (while other corporates pay 30%).
(ii) List 30% and pay 25% tax for next 5 years on profits.
(iii) List 40% and pay 20% tax for next 5 years on profits.

Tax exemptions;
– A tax amnesty on omitted past income
– Dividend taxes paid to venture capital firms
– Income to employee share option programs (ESOP’s)
– Interest income on long term infrastructure bonds

Also all East African nationals are treated as ‘locals’, not foreign investors in allocation of IPO shares and get (lower) withholding tax on their dividends. These and other tax deductible expenses including payments for credit-rating, listing & issuance costs, and some exemptions from stamp duty, can be found at the CMA site.

Share Portfolio February 2010

Unchanged since last quarter and compared to a year ago

The Stable

Diamond Trust ↑
Kenya Airways ↑
Safaricom ↑
Scangroup ↑
Stanbic (Uganda) ↔
Uchumi ↔
Trades: None
In: None
Out: None
Increase/decrease: None
Best performer Kenya Airways up 106%, then Safaricom 38%
Worst Stanbic UG, no change (actually was up 5 UGX per share, but the Uganda shilling is weaker)
Unexpected Gains/Losses: None
Performance: Portfolio is up 11% while NSE index is up 17% in three months – thanks largely to Safaricom which is ¼ of the index.
– Uchumi may resume trading at the Nairobi Stock Exchange after four years of suspension now that shareholders have approved restructuring of remaining debt in consultation with the banks who put the chain under receivership.
– Unlisted investments are tricky to track and problematic to measure or exit.

NSE Portfolio May 2009

hit bottom? Time to buy?

Last quarterly check of the Nairobi share portfolio was in February 2009 and a year ago

The Stable

Diamond Trust ↓
Kenya Airways
Safaricom ↓
Scangroup ↓
Stanbic (Uganda) ↓

– Best performer: KCB up 2%
– Worst performer Stanbic down 30% (combination of share drop and weaker Uganda shilling), and Safaricom down 10%
– In: Kenya Airways
– Out: none
– Increase none
– Decerease none
– Unexpected gains/losses: none

Events & Outlook:
– Performance: Portfolio is up 1% in the last three months while the NSE Index is down 3.5%
– Bought KQ, tried to buy illiquid Kenol at 30

Looking forward to
– Dividend payments expected from Diamond Trust, KCB, Scangroup, Stanbic (UG)
– Privatization commission has lined up several companies that may be availed later in 2009

Ugandan Envy

this is NOT about Migingo Island

Google Earth image courtesy of afromusing

A year ago wrote this on the information availed to Ugandan investors by their companies; this year the envy is even more, it makes me sad; that by being the leading country in the region, we may not notice we are being passed in some aspects of investor awareness & rights.

Use of E-Mail: The Stanbic Uganda invitation/AGM notice again arrived by e-mail; now many Kenyan companies have passed by-laws allowing them to send out e-mail notices and annual reports to shareholders, but none has done so far. Maybe, with the eventual passage of the much-maligned/controversial communications bill the legal framework is now there to back enable this – but we’ll see; While not every shareholder will have an e-mail account, if 1/4 of 1/3 of some company’s shareholders (Kengen, Co-Op, Safaricom) do, then these companies could potentially save millions of shillings in postage costs.

Investor Disclosures:
(i) For Stanbic UG, rules of voting are clearly stated – shareholders are to endorse new directors and that 1/3 of directors will retire at each meeting.
(ii) for directors who are up for election, their mini-CV’s are printed out for all to peruse i.e. their ages, year of appointment, educational qualifications, directorships in other companies, and committee seats.

In Kenya, Company Chairmen just mumble through, if at all, fully expecting elections to be a foregone conclusion. Refreshingly here, the directors up for election at Stanbic Uganda (Hannington Karuhanga, Kitili Mbathi, and Samuel Sejjakka) are all younger than 50 years. In Kenya, opportunities for younger leaders & directors are the exception rather than the rule. But at Stanbic Uganda – the Chairman and Deputy Chairman have their tenure is capped at two terms of 5 years only.
(iii) Remuneration of directors is declared. Again in Kenya money amounts paid to directors are rarely mentioned, but in Uganda, they are spelt out for shareholders to approve – here the Company (non-executive) Chairman gets an annual retainer of US$7,500 while a director gets US$5,500

Language used; several companies (most recently) KCB have amended their company article to allow for electronic communication with clients; but they merely replace one of gibberish with another one, without bothering to explain what the jargon means. Here; Stanbic explain allows video-conferencing or tele-conferencing to be used at board meetings

Proxy detail proxy forms contain a lot more details including the items to be voted for with shareholder able to vote for or abstain on votes. They also call for shareholders to provide contact details (name, e-mail – what an easy way for a company registrar to build up a working database to manage is subsequent years)

Shareholders or their proxies (who can be more than one) are entitled to attend, speak, and vote, and the endorsement /presence of a proxy does not disqualify a shareholder from attending; this enables a shareholder to bring his wife/wives or children for them to learn about the process!


Investor guides: There are many things to learn from other countries in the region on investor rights and information despite Kenya being the leader. We are innovative, Uganda is about to unveil a CDSC system that Kenyan investors have had for three years, but which rogue stockbrokers have besmirched. It would not be surprising if the Ugandan version may be sorted out ahead of time, closing loopholes that will be used to protect shareholders, and by educating them on how the system works.

All the regional exchanges – Kenya, Tanzania, Uganda, and soon Rwanda (where KCB, Kenya’s largest bank in Kenya will be the first company to have its shares be (cross- listed & trading) all have the same information; but my NSE seems stale, like all the regulations were put up years ago and forgotten. Usualyl, we just check for the latest share trades, bond trades and quarterly financial announcements.

e.g. Faced with a budget deficit, Kenya has lowered the minimum amounts to invest in bonds to Kshs. 50,000 ($625). The Central Bank of Kenya which issues these bonds has put up some investor information basics, but nothing from the NSE who trade in these bonds. In Uganda, there is an advisory page for investor guides for bonds and shares, for any new investor to read, download for free.

Also in Kenya, tribe is the unacknowledged elephant in the room; one we pretend to not be influenced by, but which governs many aspects of our lives. Kenyans are required to communicate official in English (almost all government documents), and to a lesser extent in Kiswahili. But there are rural folk who may not understand the national or official language, but may wish to learn about shares and bond Uganda has investor awareness booklets in vernacular languages – including a Luo investor guide (PDF)(for the Northern Region) available from the Uganda Securities Exchange. And that, properly disseminated, may be worth much more than a small island.

IPO Guilt

I am

Guilty of having to get into an IPO queue after signaling a wavering of my IPO strategy (its political season)

Guilty of waiting till the last minute; procrastination is a Kenyan habit, and the queues of Safaricom are very long in the last 24 hours, despite the IPO having run for almost a month. What were we waiting for? (and does Obama carry this gene?)

Party guilty of not fully embracing technology: it’s actually possible to buy the shares without having to join a stockbroker queue if (i) you apply online at the official IPO site (which I did) but I did not (ii) attempt to pay via ATM for the same shares. IPO’s tend to run on a different cycle and I didn’t want to be time barred for a delay in funds

More on the official IPO site; it calls for a leap of faith like buying an air ticket online with boarding pass and successfully completing the flight. But the site does not seem to allow for any amendments (buy more or less shares or even cancel an order after you have applied.

And then I received this ominous e-mail from whoever runs the official site

Safaricom IPO”
To: ___________________
Date: Thu, 17 Apr 2008

Dear Sir or Madam,

Thank you for your online application for Safaricom IPO shares dated 4/__/2008 reference _______, in the name of ______.

Please note that the next stage of the application process is to make payment for your application at the receiving bank or broker that you selected, by the close of the IPO offer period on Wednesday April 23rd 2008.

If you have already made payment for your application, kindly disregard this email.

In the event of any queries, contact us via email at or call us on +254 20 2754300.

Warm regards
Customer Service Team
Safaricom IPO at Citi

So let’s see how it goes in the last day of the IPO as I pay for the shares.

across the border: Stanbic Uganda, another over-subscribed IPO from 2007 performed even better than expected with a nice dividend of Ug. Shillings 6.64 shillings per share. Maybe I should try the Zambia Celtel IPO too