Category Archives: NSE IPO

Access Kenya IPO

IPO season is on again and this time its Access Kenya – a leading corporate ISP and telephony company.

Am yet to see the full prospectus, which should be an interesting read to see the trend of share capital and profit adjustment that is alluded to in the abbreviated prospectus published in the paper on Thursday – the day the IPO started.

The company has learnt from the Eveready listing and set out to limit shareholder numbers by setting a minimum investment for retail investors at a moderately high 50,000 shillings ($715).

Industry: The communications sector has so much happening now from – unified licences, the Wananchi ATC deal , Telkom SA/AfOL deal, Telkom Kenya re-engineering itself, EASSY vs. TEAMS cabling, fibre optics everywhere and of course Safaricom at the top of the food chain who have continually reinvested much of their record profits towards infrastructure expansion.

Investments in the sector are not cheap and with technology rapidly evolving, the 400 million shillings that will accrue to the company may not be enough for more than a few years at a company that starts off with a marginal balance sheet.

IPO results will be out in May and shares will be listed in June 2007.

Other opportunities

from the daily papers this week

Jobs

Coca Cola – East & Central Africa business unit: franchise marketing manager, hospitality manager, operations marketing representative, financial services manager financial accountant senior brand manage (2) revenue growth manager commercialization manage (2) strategy development manager, human recourse manager compensation & benefits manager quality improvement manager

Apprenticeships for mechanics at DT Dobie: applicants must be under 22 with good grades in maths, physics, English and apply in handwriting by 11/5 to DT Dobie Training Center p o box 30160-00200

Safaricom: head of customer management, head of retail. Apply to chro@safaricom.co.ke.

Soon you can dine in the skies as the Kenyatta International Conference Center has set out to revive its roof top revolving restaurant on the 27th & 28th floors of the building.

Easter weekend

No trades
I realized that I had not been to my stockbroker’s office to trade this year. It would be good to visit to find out the fate of my Stanbic shares. I’m not sure if I got a full allocation or a refund since I have not got any report from the broker. This week would be a good time to visit before the lines begin for the Access Kenya IPO which starts next week.

Access Kenya IPO
Access Kenya announced that their IPO will begin on April 19th. The company hopes to sell 80 million shares at 10 shillings ($0.14) each to raise 800 million shillings ($11.4m). I look forward to the prospectus to be released within the next few days to give a proper picture of the communications market. And we are also awaiting an IPO from Wananchi, Kenya’s largest ISP who unfortunately lost a bid for Africa Online to Telkom of South Africa.

The ISP industry has shown tremendous growth, but the sector faces additional challenges for investors.

  • First like the Scangroup IPO, intangible measures take on greater significance in comparing the company against its peers and its future prospects.
  • Second, an additional regulator comes into play i.e. the Communications Commission of Kenya. The sector has seen some turbulent investments that have not reached fruition including the third mobile operator (Econet in court for three years) and the second national operator (license has been awarded and canceled twice). Also CCK will in future move towards giving unified licenses, which means that companies won’t have to go back to re-apply each time they want to introduce a new service.
  • Third in a unified license world, and once a restructured Telkom has been sorted out, Safaricom and Celtel may be the ISP companies of the future with their EDGE / GPRS offerings. (ISP’s are already complaining about mobile companies not playing fair with interconnection, leading back to the regulator again).

Corporate divorce
Alexander Forbes of SA has withdrawn its name from Alexander Forbes insurance brokers of Kenya citing a lack of majority equity or management control. The Kenyan operation (formerly Hyman Robertson) who already have a new name ready to launch, feel that they have been good custodians of the brand, turning it around from loss-making one to being one of the largest in East Africa.

Fading libraries?
Read in the Sunday Standard that the British Council was closing their library in Mombasa owing to declining memberships.

Looking back on Kengen & Total

Total: In October last year, Total Oil held a cocktail party to reassure shareholders after some dismal 9 month results.

Now that the 2006 results have been finalized, here are some other things shareholders were told at the event.

  • Company experienced difficulty with the up-front payment of taxes and ineffectiveness at the oil refinery in Mombasa.
  • Total had made a provision of 100 million shillings for an oil marketing case, but that very day the high court had ruled in their favour.
  • The Chairman (Mr. Nguer) promised that the results at the end of the year would be much better than the 9-month ones
  • More comparisons to Kenol: he said that Kenol share price was 115 shillings in April and 109 on that day in October, while total had similarly changed from 44 to 37/38. He also said that while their operations were down 9%, Kenol’s were down 30%. [Today March 2007 – Kenol is 85 and Total 30]
  • Commenting on Mobil oil exit and entry of Tamoil (of Libya) to Kenya, Nguer remarked that the sector was stable but that oil marketing was unique in Kenya and some multi–nationals could not understand this.
  • On threats by Minister of Finance to fix oil prices, he said he did not see the country going back on its 1994 deregulation of the sector prices

Kengen: The surprise announcement last week that a Geothermal Development Company  (GDC) would be hived off from Kengen prompted a look back at the company’s pre-IPO prospectus. And sure enough in the future outlook for the company, the Kengen prospectus does mention the state will set up a geothermal development company to undertake high-risk activities such as exploration and drilling. It will be financed by appropriations from parliament and will take over Olkaria from Kengen.

Also that:

  • Regulator (ERB?) will be empowered to set the price of fossil fuels bought by Kengen i.e. diesel. This is likely to affect independent power producers.
  • New rural electrification authority. Any impact on KPLC?
  • Kengen to bill KPLC at 2.36, not 1.76 per kWh which has become a hot button issue in this election year.

Eveready Mea Culpa

Mea culpa Eveready
I was wrong in estimating diminished interest in the Eveready IPO. 200,000 Kenyans applied for shares in the company and will each receive about 20% of the shares they applied for.

“Corporates” will only receive, at best, 17% of the shares they applied for, but are assured of much better allocation in the about-to-end Mumias offer which closes on Monday.

Bad loans for shares
I was also wrong that no banks will advance loans for Eveready shares.

This still happens, but with less fanfare/advertising than was seen with the Kengen IPO in March. IPO loans are not that attractive to banks since most offers are over-subscribed leaving borrowers with much fewer shares than they applied for – about 20% allocation on average. Also since Kengen has stuck at about 3X its IPO price and Scangroup (2X IPO price), banks are taking on some risk in undertaking such lending. E.g. Say I took out an unsecured personal loan of 120,000 shillings to buy Kengen shares (for 36 months at 19% interest). After the IPO I’d get 2,000 shares whose value of the past few months has been between 60,000 and 72,000 shillings. Meanwhile I have to pay back 150,000 shillings to the bank over the next three years.

Banks need hawkers
This week my bank ATM confiscated my card since it did not recognize my PIN number. I have not forgotten my PIN but the bank has a new IT system that for some reason only recognizes the original PIN, and not the PIN I had changed to as soon as I got the card months ago.

Anyway, I had to do something I dread doing today – visit/queue in the banking hall. It was a time wasting hour, 10 minutes of which I spent in the wrong line. Some banks have empty halls while others have crowded halls of customers who line up to deposit over the counter money. I got to thinking that maybe the bank should allow hawkers in to do some business and share the profits with the bank. They could sell newspapers, fruit, and airtime. Better yet, banks should stop their ridiculous no mobile calls rule for banking halls. If I have to spend a 1/5 of a working day in the bank, I should be able to do some other business over the phone.

Anyway I will be back in two weeks to collect a copy of my original PIN and resume using the ATM for normal banking

Where can you trade shares?
A rough estimate of the access to stockbroking services reveals that Nairobi (and other urban centers) have an undue advantage over rural folk in terms of stockbroking services. While IPO shares are sold at banks throughout the country e.g. KCB, for normal share trading one has to issue a stockbroker.

Like with urban bank customers (who are net borrowers) compared to rural customers (who are net savers) the rural shareholders are at a disadvantage in their access to stockbroking services. On the other hand, they trade much less (earn less commissions) than urban shareholders – preferring to buy and hold shares for dividends, bonuses and AGM goodies.

All brokers have office in Nairobi (including 3 for CFC and 2 for Suntra) while the rest of the country has brokers spread out as follows: Mombasa (Apex Africa, CFC, Dyer & Blair), Naivasha (CFC), Nakuru (Apex Africa,
CFC, Nyaga), Eldoret (CFC), Kirieni (Apex Africa), Kisumu (CFC), Nyeri (Nyaga), Thika (Nyaga), Machakos (Nyaga).

Recent trend Over the last month, Discount stockbrokers have opened offices in Kisumu, Mumias and Bungoma to facilitate the Mumias share offer.

Wishful thinking about oil
Reading this NY Times story about oil smuggling from Venezuela where oil costs $0.17 a gallon to Brazil where it cost $5 a gallon makes me wish that when if Kenya strikes oil, the price of petrol will drop from the current $5 a gallon (Kshs. 77/litre) to $0.17 (Kshs. 3/litre)

Opportunities

jobs

anon new bank backed by prominent middle east and other corporate investors is hiring human resource manager, IT manager, head of operations, head of corporate banking, head of retail banking, head of risk management head of treasury, head of investment banking, head of finance, head of trade finance, relationship managers, security manager, PR manager, branch managers, tellers,
Apply through Manpower services (K) by 23/12

Executive director at East African business council (Arusha) apply through manpower at manpower@africaonline.co.tz by Jan 5

Country manager – S. Sudan at family health international. Apply to hr@fhi.or.ke by 29/12

FSD Kenya SACCO-CAP (SACCO capacity building project) credit specialist marketing specialist financially analysts, IT specialist
Apply to sacco-cap@woccu.org by 27/12

Haco
– planning manager
– Financial accountant
jobs@haco.co.ke by 19/12

I&M Bank
– Liability Manager
– Relationship Manager – Assets
– Relationship Manager – Liabilities
– Marketing Relationship Officer (Mombasa)
Details and applications online

Manager procurement at the Kenya civil aviation authority – KCAA
jobs@kcaa.or.ke by 29/12

Kenya revenue authority
– Senior deputy commissioner: research & corporate planning
– Senior deputy commissioner: legal services
Apply through deloitte at esd@deloitte.co.ke by 5/1

Ministry of foreign affairs principal counselor (4) first counselor (11) second counselor (22) first secretary (28) third secretary (64)
Details will online and apply by 12/1

Nuturn bates
– Account director
– Account manager.
Apply to sam@nuturnbates.co.ke

Ogilvy
– Finance director: apply through KPMG at esd@kpmg.co.ke by 29/12
– Accountant D/L is 19/12
– Credit manager D/L is 19/12
Account managers (3) D/L is 21/12
Apply to info@ogilvy.co.ke

Safaricom
– Site Optimization Supervisor
– VAS Propositions Manager
– Business Analyst – Strategy Implementation– BASI_Nov06_CSP
Details at this site

Shelter Afrique
– Investment officer (directorate of operations)
– Internal auditor (bilingual)
– Translator (English/French) at the corporate secretary department
Apply to recruit@shelterafrique.org by 15/1

Travel insurance marketer at UAP insurance. Apply to recruit@adeptsystems.co.ke by 29/12

Finance director at the world wildlife fund (EARPO – Nairobi). Apply to HResource@wwfearpo.org by 31/12

learning/possible employment
Opportunity at the Steadman Group for some participants who enroll in an applied research training program at Strathmore business school . Fees are 75,000 shillings and applications can be found at www.steadman-group.com/scrt or www.sbs.ac.ke/scrt. Application deadline is 31/12 and classes begin on 27/1 for the two month program which also includes 2 week research at Steadman

Hospitality
– Kenya Wildlife Services is seeking partners to lease develop and manage tented camps in Western Kenya – at Kisumu impala sanctuary, Ndere island national park and Ruma national park. D/L is 19/1

Earn $17 a day (per bed) by hosting delegates World Social Forum and provide them with bed & breakfast, running water & electricity from January 20 – 25.

travel
Buy a ticket at East African to Mombasa directly from the airline get a second one free (up to 6 January)

IPO fizzle

No disrespect to the Eveready IPO which opens today, but there appears to be less enthusiasm for what it now the 3rd IPO this year after Kengen and Scangroup. There are lines outside stockbrokers today, and will be around for the next two weeks but nowhere near Kengen size.

Most of the fatigue comes from the over-subscription and resultant fractional allocations of shares to investors – each requiring several trips, phone calls and hours spent pursuing IPO shares.

Likewise to buy Eveready, I’d have to sell something or if I wrote a cheque i’d have to make several trips to my broker – who’s normally super efficient. But at IPO time, things get hectic with the long queues and harried staff – payments/orders get misplaced or have to be corrected, and a second trip would likely be in order, followed by a third in a month’s time, after the IPO results are known (11/12), to collect the inevitable refund cheque (after 15/12).

I may be better off just waiting to the shares to list (on 18/12) then simply send my broker an e-mail to buy the shares. Price volatility can be expected on day one, but with Christmas around teh corner, there won’t be much activity on the exchange and the price should hold steady (I hope) till January.

Careful banks: Unlike before when several banks lined up to offer loans to buy Kengen shares, they are still available, but there’s no marketing or fanfare announcing them. Also, while Kengen was sold on almost every street corner, this time KCB is the only commercial bank selling Evereyady shares.

Still I must commend some brokers who have opened satellite offices to process IPO applications, thus easing the crowds at their main offices.

BARS free
Barclays shareholders will endorse the sale of their BARS to CAPSEC of South Africa – in addition to a share capital increase, bonus, and share split at an EGM in Nairobi on December 8. Register closes Nov 29

No parking
The latest ludicrous proposal by city council is to double the daily parking fee from 70 to 140 shillings ($2) in order to finance the construction of parking garages. What the council should do is have a bond or enter an arrangement with a bank that will finance construction of the parking in record time and the council can repay the bank over the long term. The council would be ill-advised to finance construction using daily collections of which it has little control. The proposal also has no end date which means we could be paying double for the next 10 years, long after the project is over, or without any new parking garages ever being built.

Posta booster
There’s a story in the East African today about how the Postal corporation will reap over 16 million shillings ($226,000) from Kengen mailing annual accounts and notices for their AGM on November 30. Kengen had to pay for tens of thousands of stamps and has budgted 80 million shillings ($1m) for the day.

Nyramid update
A prominent city Church led by a charismatic preacher is behind one of the newest Nyramids.

Tesco’s here
Tesco, a former partner of Uchumi has opened its own Nairobi supermarket.

Cadillac’s to Kenya?
Cadillac returns to Africa via South Africa with right hand drive cars which will then be sold to other Sub-Saharan African countries -with BLS, SRX and STS models arriving early next year. Geenral Motors has a significant presence in the Nairobi through isuzu truck and minibus sales.