Monthly Archives: March 2008

Safaricom IPO: Day 2

Apply online: For Safaricom shares, check out the Official IPO site from Citi

Bears bleed
– NSE Bears: For the second day of the Safaricom IPO era, only 3 NSE shares rise, same as on Friday, while the rest drop or are flat.
– Farewell: To Bear Stearns sold for $2 a share, down from $170 a year ago and 7% of what it was worth on Friday.

Vultures circle:
Beware of loans for shares
– Equity Bank offering up to 80% finance for the Safaricom IPO
– Fanikisha account from Transnational Bank offering 70% finance towards the IPO

edit – We’ve been Punk’d!
Corporate blog: A big salute to Equity for breaking another milestone – presenting the first official bank blog – here’s the Equity Bank Blog. a WIP, but keep it up, stay strong, relevant, and up-to-date
Thanks JP for looking out

Motoring moment: asset finance personified


nice poster here from Lunch over IP on urban transport solutions

The traffic crunch in Nairobi has gotten worse in the last week since 1/3 of the city’s commuters had restrictions placed on their access to downtown Nairobi.

It’s fait to say that over ¾ of cars from KAP___ onwards (cars registered in the last five years) are financed with asset or bank loans – so they are a reflection of the amount of credit in the economy.

But the traffic crunch will continue unless some serious measures are taken as there are few new roads or new parking spaces coming up in the city

What are some solutions?
– Better public transport as the image above shows.
– Restriction on vehicle imports/registrations; But bad for the economy, encourage corruption
– Restrictions on asset finance lending; but bad for banks
– Restrictions on vehicle use e.g. only use vehicles ending with odd number on one day, even the next: but favors the rich (with more than one car) and will encourage fraudulent license switching
– The India way (as adopted by Uganda) and small town in Kenya which is to have motorbikes as taxis. This would be great for those who work in the upper hill area
– Car pooling, temporary parking meters, new capital city? The list is endless

Smart investing the Safaricom IPO

The financial part of the day is over with no announcement on the start of the Safaricom IPO; when it comes, should still not matter as chasing an IPO is a futile matter for a savvy retail investor. This is how it works – buy the shares after they list, not by queuing for hours around the block only to get 50 shares and 90% refund cheques.

All Kenyan IPO’s priced at less than 10 shillings have been greatly over-subscribed and this one which falls in that range could be the biggest.

So wait for the shares to list, and then buy. They may be floated at 10 shillings, and open at 25 – but have you lost anything? Not if you and 300,000 other shareholders all start off with 50 – 100 shares each. In fact you have a head start as you will have your money ready while the others wait for their refund cheques to be processed

What else to do;
– Buy through an investment club or a company if those groups get preferential allocations
– Buy other shares that may drop in price
– Marry a Safaricom employee, or better yet – get a job there and apply through the employee pool
– Use a reputable stockbroker stockbroker or bank

What not to do;
– Don’t take a loan to buy IPO shares.
– Don’t buy through multiple names/relatives/companies – you’ll have to chase a refund for each and consolidate after.
– Don’t wait for the Econet option – I’ve being writing about their launch/imminent rollout in Kenya for as long as this blog has existed

That’s what I’m doing: any other suggestions for maximum returns?

FAUX PAX
Ooops, spoke too soon – sorry Mr. Minister

Kenya sets Safaricom IPO share price at 5 shillings
NAIROBI, March 14 (Reuters) – Kenya is to offer a 25 percent stake to the public in leading mobile phone operator Safaricom at 5 shillings per share, Finance Minister Amos Kimunya said on Friday. Kimunya said the offer would open to the public on March 28 and close April 26. There will be 10 billion shares for sale. The proposed Safaricom sale may prove a key test of domestic and foreign investor confidence in east Africa’s largest economy after negative effects of the post-election political crisis. (Reporting by George Obulutsa)

Still the math does not change. Assume a realistic 3 million shareholders, they can each get 3,333 shares each at a cost of 17,000 each – still means over-subscription, and that does not factor in any preferential allocations for corporates and employees, reducing the pool

Bank Wars: Pepea

Barclays is really going after small accounts holders and low savers such as students. The latest account is called Pepea (implies lightness) which is an ATM-based account with a flat fee of just 100 shillings ($1.5) and 20/= per ATM withdrawal – putting it in the range of Equity’s 50/= fees. This extends Barclays aggressive growth to counter Equity Bank – to an extent that it seems they are subsiding services in order to gain deposits and accounts.

With Pepea, you actually get penalized if you have more than 30,000 shillings ($425) in your account.

Rogue brokers?

A somewhat irresponsible article in the wake of the collapse of Nyaga Stockbrokers last week – fingers four more brokers that the (now awake) regulator has issues with. An article of this magnitude about a bank could cause a run on deposits or worse.

But the firms – Solid Securities, Reliable, Crossfield and Discount Securities appear not to have been affected, and a causal visit to their offices shows they are devoid of crowds of panicked investors as seen on TV last week. These are not ‘rogue’ brokers robbing their clients, just some brokers who have other regulatory issues to sort out.