Almost halfway through the IPO window which runs from October 30 to November 13 2008 at Kshs. 9.50 each. Minimum application amount is 1,000 for retail investors who will get 66% of the floated 701.3 million shares

Basis for listing funds raised will go toward new banking system, new branches, mortgage finance business, card business etc.

Cost of listing The budgeted cost is Kshs. 249 million ($3.1 million) and includes Placement fees 99m Advertising 68m, CMA fees 20m, Printing 17.5m, Lead Sponsoring Stockbrokers fees 8.4m, Public Relations 8.3m, Co-sponsoring Stockbrokers Fees 5.2m, Lead Transaction Adviser 5m, Legal Fees 5m, Receiving Bank fees 3m NSE listing 1.5m and valuation fees of 0.9m. This compares to Equity listing – 28m, Access Kenya 40m, Kenya Re 280m, Kengen IPO 401m, KCB rights 1.1 billion, and the giant Safaricom IPO at 1.1 billion shillings

Expert advice: See also Nairobist and Ratio perspectives on the Co-Op IPO

Float Retail investors will get 463 million shares and qualified Institutions will get 210 million shares, with employees another 28 million shares. The cooperative societies, which will own 62% of the company, are locked in for 5 years, but the existing individual shareholders are free to sell their (680 million) shares.

National Bank of Kenya a joint-receiving Bank for the IPO and the only bank to step forward and offer 100% loans towards the Co-op Bank IPO. Consolidated Bank has just announced that it is also financing.

Numbers Projected EPS is Kshs. 0.66 for 2008 from a profit of 3.45 billion ($43 million), and estimated assets of 87.6 billion [deposits of 66 billion and loans of 51 billion]. the bank has about 800,000 customers, 50,000 CDS accounts, 53 branches and 152ATM’s

Shareholders top shareholders comprise some of the largest savings and credit societies and also top management of the bank. These include Harambee SACCO 3.7%, Teleposta Sacco 2.97%, Afya SACCO 2.94%, Masaku Teachers SACCO 2.90%, Kipsigis Teachers SACCO 2.46% Kenya Police SACCO 2.33%, Gideon Maina Muriuki 2.32 (the Bank MD), Kiambu Unity Finance Co-operative Union Limited 2.27, Nandi Teachers SACCO 1.78%, Aembu FCS Limited 1.77% Mungania Tea Growers SACCO 1.57%. The top 10 individuals are all senior managers and board members (4%)with about 51,000 other shareholders, but there’s no lock-up period for their shares. Equity listed with 2,800 shareholders

Recapitalize a Subsidiary – Co-op consultancy services (-17m reserves) which builds capacity among SACCO’s is also one of the goals from the listing

Subscription: mid week, little traffic and activity among brokers and at various IPO tents around town. Subdued but significant marketing is taking place. Adverts in the newspapers (even the Weekly Citizen tabloid) and on TV

Timing of Listing IPO euphoria for shares has dampened somewhat since the Safaricom IPO and the downward trend of the market right up to the start of the Co-OP IPO

Transaction advisersLead advisers – PKF added to Dyer & Blair, National Bank added as a receiving bank

Valuation beyond setting the basis for the offer price at 9.50, there’s no comparison to peer banks of this size (KCB, Barclays, Equity) which would be expected.

Verdict slight over-subscription expected. barring Safaricom, past IPO’s generally appreciate after listing long enough for speculators to cash out. The shares are much less than the 10 billion from safariom, but having 1 billion shares floating in the market with a large retail pool will have the shares behave like Mumias Sugar shares [Kenya re 9.50 august 2007 for 240m shares]
Me? bypass for two reasons (i) IPO bypass theory resumes even though a lot of the negatives associated with IPO’s – queues, refunds, hassles seem to be are absent (ii) my portfolio is overweight on financial shares.