Category Archives: Nairobi Stock Exchange

How Safaricom can adapt Vodafone’s investor relations


old safaricom logo incorporating vodafone

Safaricom have done a great job in terms of dealing with investor relations since its listing; they have also said there won’t be any SWAG for shareholders at their August annual general meeting (AGM).

But there are things that Vodafone can do that can enhance shareholder value beyond giving mere t-shirts and lunch boxes. As 40% owner of Safaricom, Vodafone can drive many things about investor relations. Consider that while Safaricom is considered to have too large a register with 831,000 owners, Vodafone is not too different with 551,000 shareholders – 440,000 who own less than 1,000 shares, and just 46% presumed to reside outside the UK. Despite the numbers, the Chairman’s letter invites as many shareholders to attend the meeting and participate (and probably ward of any hostile resolutions)

So here are 10 things Safaricom borrow from Vodafone to enhance shareholder relations in lieu of SWAG:

1.Have an enhanced agenda and promote shareholder participation in management. Many NSE companies do the bare minimum asking shareholders to adopt accounts, approve auditors and re-elect 1/3 of directors – that means an AGM can take 15 minutes which leaves the floor open for the nonsense questions. With a ‘fatter’ agenda shareholders won’t have time to ask for trivia. Newer companies like Access Kenya, Equity, and Scangroup are more pro-active with the management of their companies. So decisions on acquisitions, fund-raising, are common on the agenda. Another examples is executive compensation: many companies ask shareholders to approve creation of employee share options plans (ESOP’s), but then leave the computation and awarding of benefits to trustees (another set of directors); at Vodafone, shareholders know and vote how much current CEO Vittorio Colao, and former CEO Arun Sarin earned, so why not let the shareholders know how much Michael Joseph and the directors earn per year per meeting etc. Can’t handle that? Uganda companies can do that. Also at Vodafone all directors retire each year, which should ensure a robust re-election session.

2. The complete 2009 Safaricom annual report will only be given to those who request it, to save costs. It will be downloaded from the website. So let’s have a interactive report so investors can choose to download video or just sections they are interested in e.g. the notice only. Same with the memo & articles

3. Promote a alternative methods for shareholders’ to enhance value. Support a dividend re investment program (DRIP). Not everyone wants an M-Pesa dividend; some may prefer to buy 100 more shares in the company instantly, while the shares are still cheap (Kshs. 3.7 or ~$0.05 per share) and a DRIP will be a useful tool that keeps cash within the company and its owners. Alternately, if feeling philanthropic, Vodafone shareholders may donate their meagre shares to a charity – and why not to a school in Kenya that was Tahidi High last night!

4. Broadcast a webcast of the AGM – this will be a showcase for safaricom’s broadband capabilities and will be enable foreign investors to participate. If not ,broadcast it on TV so people don’t have to travel to Nairobi from other towns and can watch have it from home – NTV or Citizen would cover the mid-morning event up to the 1PM news

5. Promote alternative voting ; by e-mail, by telephone, by mailing in the post; mail-in happens in Kenya, but Kenyan investors feel they have to be there, to vote which is not the case.

6. Send investors information by phone (SMS) or e-mail. Safaricom is a mobile phone company; they send trivial messages to advertise products, so why not also quarterly results by phone? And for those of us at the next level, why not Safaricom twitter ? Join @kenyaairways and @jimmykibaki (:_}) on the new media wave

7. Don’t leave everything to the share registrar: On the website, shareholders can track their shareholding, change their address, and change their dividend payment option. At the meeting have a shareholder help desk – already a common feature at bank AGM’s (Equity, NIC) but to help them transfer their shares to the bank. Online information use was a feature deployed during the IPO, but that information is sitting un-utilized in a server somewhere

8. Pre-empt shareholder questions with a FAQ. Compile a list of frequently asked questions with appropriate answers, put them on website, or hand out flyers for those who attend meetings.

9. The Vodafone site warns investors about boiler room tactics and cold callers after their shares. So why not tell shareholder which brokers are misbehaving? Which to use and not to use?

10. Vodafone governance policy calls for disclosure of any political donations (and for Safaricom if any) – it has been noted here that the company tends to have increased corporate social responsibility activities in the home areas of the sitting information minister

11. Oh, and finally Tea & coffee will be served at Vodafone AGM

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.

Mark Mobius on Emerging Markets

Dr. Mark Mobius, the executive Chairman of Franklin Templeton Investments,is in Nairobi this week. He gave a talk this morning on his investment perspectives. It is especially timely considering the bear market being experience the world over and at the Nairobi Stock Exchange this year.

Some notes
– They are bargain hunters, they love cheap stocks and thus love bear markets
– Emerging markets look good for long term investors for several reasons: they are growing faster than developed countries, they have less debt, they have more reserves, inflation is coming down, they are taking up a lager share of world trade and also trading more with each other
– Bull markets are followed by bear markets which are followed by bull markets then bear……
– Bull markets last longer than bear markets, and values appreciate more during bear markets than they depreciate during bear markets. he said by their measures over the last 20 years bull markets last on average 22 months and values appreciate by 113% while bear markets on average last 6 months and values depreciate 32%
– Various FT funds are concentrated in mainly energy stocks, then banks, raw materials, communications etc.

My take: This is a time to buy Nairobi Stock Exchange Shares (NSE) , if you have the money and a long term investment perspective

EABL 2008 AGM

The 86th annual general meeting (AGM) of East African Breweries was held on 30/10/08 at Safari Park Hotel. The actual meeting business (passing of accounts, election of directors, and approval of auditors) all took about 10 minutes. There was only one question on the accounts and the rest of the meeting was left to a myriad of shareholder questions.

Why Financial Markets Crashed: The meeting began with a talk from the former chairman of the Nairobi Stock exchange Kibuga Kariithi (Director Afrika Investment Bank). He traced a path of American economic exuberance, greedy investment bankers, sub-prime-mortgages, careless insurers which all led to a liquidity crunch and loss of confidence in the markets – eventually reached Kenya

He exhorted EABL shareholders that their company was strong, with growing sales, profits, products and almost 7 billion shillings in the bank. He said the market would remain so for a few more months, maybe with a few more bank crashes, but the fundamentals of EABL and other companies were strong and this was a time for shareholders not to panic or sell, but to consider buying more shares.

Mini-controversies:

  • Crap Calendar: One of the goodies handed out was a (single-sheet) wall calendar. Which was not well received by several shareholders. It was called, cheap, not in keeping with the image of the company, not as good as the one which was given to distributors, and eventually, even the chairman had to admit that it was a poor quality item.
  • End for Chami?: Mr. Chami is a (small) shareholder in almost every listed company and a feature at almost all NSE-listed company AGM’s held. He unusually is the first to ask any questions and almost all directors know him. He usually asks but occasionally hits the mark. Today he got off to a bad start giving a 5 minutes speech that led to a round of boos by shareholders. When he finally got to asking questions, he was challenged by the Chairman on the accuracy and validity of his questions – and told not to waste the time of the other 700 shareholders present if he had no questions. Hope it does not spread to other meetings

Mr. Chami

Trivia some questions asked by shareholders

  • Start with prayers
  • More environmental plans; will consider energy savings from steam and have participated in forestry activities in Ndakaini and may look at (the) Mau when government sorts out the matter
  • Unclaimed dividend: a bill has been prepared on unclaimed assets that will soon be in parliament after which companies will get guidelines on compliance
  • Is Alvaro alcoholic? No it is not
  • Can dividend be cashed at banks?
  • Give more bonus shares please?
  • Give more dividend to long term shareholders – asked by an old lady who has been a shareholder for 35 years)
  • Can we have cheaper AGM’s? e.g have the meetings at a venue like Kasarani Stadium and serve African foods, not expensive hotel foods that give high blood pressure!

Goodies: T-shirt, Calendar (see above), Safari Park Lunch box [with meat (big chicken slice, cake, beef & cheese sandwich) fruit (banana, apple), drinks (yoghurt, alvaro, water, orange juice)]

Lunch on the controversial calendar

Take Crash Positions

The Nairobi Stock Exchange (NSE) halted trading today for 15 minutes after the index fell by over 5%. (damn: just as I’m ready to sell some shares)

Elsewhere:

Safaricom: AKS says that pre-IPO shareholders lockout window has ended – so now can Vodafone start buying up some Safaricom shares and stem our losses?

Equihealth while other banks are sleeping, Equity Bank leads the way again this time venturing into health insurance. They have four plans starting as low as 6,700 (~$100 a year that include pre-existing conditions, HIV/AIDS, maternity, dental, eye-disease. (wow, medical insurance is a minefield, but Equity can sets its own terms in the industry and change the rules in the medical insurance industry)

The plans are;

  • Mango @ cost Kshs. 6,700 per person per family for inpatient (Kshs. 13,300 per person for in & out patient), covers up to Kshs. 75,000
  • Passion @ Kshs. 8,500 per family (Kshs. 15,100 per person for in & out patient), covers up to Kshs. 150,000
  • Melon @ Kshs. 16,000 per family Kshs. 27,600 per person for in & out patient), covers up to Kshs. 500,000
  • Apple @ Kshs. per family (Kshs. 35,700 per person for in & out patient), covers up to Kshs. 1 million

Scangroup: (Bharat Bank) As part of the sellout employee shareholders are seeking shareholder approval to sell up to 25% of their shares during the lockup period which is supposed to end in August 2009