Safaricom IPO and other opportunities

Safaricom IPO: The calendar is on for the sale of 25% of Safaricom shares to the public and the government of Kenya (who are yielding part of their 60% ownership) have advertised for a lead transaction advisor, lead sponsoring broker, (4) co-sponsoring brokers, legal advisor, reporting accountant, PR firm, advertising consultant, receiving bank, and a share registrar for the IPO. Details at investmentsecretary@treasury.co.ke D/L is 16 July. There have been complaints about firms offering such work for free to gain prestige

Safaricom call center. The company is also seeking to outsource customer service for prepaid subscribers to an external firm (Current traffic ranges from 10,000 – 20,000 calls per day). Details from dngobia@safaricom.co.ke and D/L is 11/7

other happenings
Pipeline finance: The Kenya Pipeline Company seeking financing for the Nairobi-Mombasa and Nairobi-Western Kenya (Nakuru, Kisumu, Eldoret) segments amounting to Kshs. 7.5 billion ($107) million over the next 2 years. D/L is 31/7

Housing: The National Housing Corporation offering 890 3-bedroom flats in Langata phase II ranging from 3.9 to 4.1 million each ($55,000 – $58,000). The corporation is also selling 38 maisonettes in Kiambu phase ii at between 3.2 and 3.4 million shillings.

Barclays
– Good : The bank has hired external debt collection agents – outsourcing a time consuming tedious function.
– Not good : The only thing worse then taking a personal loan to buy shares is using a credit card to buy shares. An investor is already in the hole, and needs his shares return 30% a year, just to break even. Using a debit card may be ok though, but factor in the card fees.

Education
– New Aga Khan University campus to be set up in Nairobi
– Moi University to soon offer a masters degree in banking & finance

Media
– Desperate Housewives start next month on KTN. Hope they don’t butcher the show like they did with the Soprano’s (heavily edited, shown at 11 PM on Sunday night and often out of sequence)
– The Naiorbi Nairobi Star (new daily newspaper from KISS FM team ) hit the streets today with a lot of fanfare, but does it have legs?

Nairobi WiFi

I am an Internet addict and if you put up a WiFi zone/Hotspot, I’d like to check it out.

I checked into Tamasha (pub in Hurlingam, Nairobi) on Saturday afternoon during qualifying for the French Grand Prix where I hoped to do a live blog of the qualifying hour like ESPN’s Bill Simmons who has lived blogged dozens of events like the super bowl, boxing matches and most recently the NBA draft.

I arrived at Tamasha at 3 pm. Ordered a beer and a goulash soup, had them change the TV channel to Supersport 5 and also got the network key for the hotspot from the barman.

The connection was very good and I was able to check my mail, check google reader (which is a test of Internet speed, in itself) and even update my anti-virus (took 2 minutes). I did not stay online for the hour (watching the race, typing the happenings, fear of viruses) but was impressed by the connection.

I did a live post of the qualifying hour, but I was unable to edit it within the hour and decided not to finish the post. I also wonder how Ethan was able to live blog every session for four straight days.

Other Nairobi hotspots

After our few days at Ngurdoto Lodge (for TED), I can’t imagine checking into another hotel that does not offer Wifi. The days of hotels offering expensive unreliable internet access should come to an end and wifi should become a regular feature for guests. Already Country lodge and Fairview have made it a point to promote their wifi as an attraction. Other hotels may have it but they don’t advertise it as the main attraction – and of course they would be for guests only.

What other hotspots are there? JKIA wifi is a bust, there’s the elusive butterfly, Java (at Junction, ABC, Adams, Village Market – but only in early in the morning and late at night, except Adams which I am told is all day). I hope to check out Telkom hot spot at Nandos/ Pizza Inn and a Skunkworks session and welcome more businesses to set up hotspots.

Plane spotter

Emirates Cargo 747 at Eldoret airport


Kenya Re IPO

Better late than never, along comes the Kenya Re IPO shuffled to the top of the privatization deck . The ace card is still Safaricom, while Kenya Pipeline should be a joker in waiting.

It’s nice to venture back into the IPO game (after passing on the last two – Access Kenya, Eveready) and I should have my Kshs 19,000 ($288) ready to go after getting the prospectus(Minimum is 2,000 shares for individuals at 9.50 per share).

The IPO delay has not been explained, but the former managing director and financial controller of Kenya Re did not help matters by getting indicted for corruption related offenses just as the process was underway nor did a late attempt to absorb the run- down Kenya National Assurance (KNAC 2001) into Kenya Re.

Despite the 2,000 share minimum for individuals you can expect it to be over-subscribed going by the numbers who applied for Eveready and the amounts individuals applied for with Kengen. While recent IPO’s (Access Kenya, Eveready) have not performed as well as earlier ones (Kengen, Scangroup, that could all change now .

Foreign and institutional investors got burnt in Kengen (the first IPO in years) after they applied for millions of dollars worth of shares only to end up with $1,000 each. Subsequent IPO’s have defined specific allocation criteria – for individuals, employees, corporate investors, others and now even insurance companies. Corporates/institutions have also been given another incentive in that they unfairly won’t have to pay until they know how many Kenya Re shares have been allocated to them.

The market is still down , as I and am sure many others have traded less this year. Most activity had revolved around new share issues and recently split shares and the reduced trading has meant less income for the brokers.
Some say it is because of the falling prices or shares are still too expensive/overvalued, others says it is because of stockbroker misdeeds.

Dividend by EFT
In another move to curtail rising shareholder costs Scangroup has twice tried to entice investors to get their IPO refunds and now dividends by signing up direct bank transfers (EFT’s) to get money straight into their accounts. EFT’s offer faster payments, by pass risky cheques (can get lost in post office and investors have take about two weeks to get funds), but while EFT’s are free are most bank’s it’s also a sly way of passing on the cost of dealing with shareholders to shareholders themselves.

The most expensive round of beer you’ll ever buy

Archer has regaled us with some great bar tales of late. So here’s a nairumor to caution/silence all those big talkers and big spenders who take one tusker and suddenly become as generous as a politician tuning a stewardess by buying rounds of drinks and sharing their million shilling investment plans and income secrets.

It is said that someone with ulterior motives will cozy up to you to listen, and maybe get a free drink for listening. Usually such a person would be a sly thief eyeing one of the three fat nokia’s you’ve laid out on the table. Now there’s another fox that’ll befriend you and ask for your business card. That person could be tax agent who’ll Google (check up on) your records at the Kenya revenue Authority the next day to see how your big bar talk measures against the small income tax returns you filed at the KRA.

Convenient banking

making trades offs as convenient banking is not the same thing as cheap banking

Equity has been the fastest growing bank in the country over the last few years. It has won customers, now 1+ million, and has sent bigger banks banks back to the drawing board to woo & retain their customers.

However, while banking with them may not be cheap for a business, it is convenient, and offers finance and flexibility to an upcoming business. People coming from abroad complain about the cost of making mobile calls here – saying they are expensive. But compared to what? A taxi driver will make a 30 shilling mobile phone call to secure a 2,000 shilling job as his phone is his office.

Same with Equity their low entry minimums suit individuals and start ups. And while some of their charges are rather hefty (3% for ENC and 10% of amount for a temporary overdrafts), as a businesswoman told me today, their quick decision making and the fact that they are the only bank that can offer these facilities to her make them the optimal bank for now. Getting cheques cleared, guarantees, and payments to suppliers matter more to her now, than the cost of these services, and help her build a credit record for the future. Once she is more established,. she will look question the transaction costs and have other banks now wooing her business.

Other banking briefs

According to Africa confidential, Kenya is favored to be the new host country for the African development bank, with Botswana second in the ranking. However Ivory Coast is back in the running following the signing of a peace accord. More on homeless banks.

The CBR Bank rate was lowered from 10 to 8.5%

The Government has commissioned a study to look into the low uptake of youth enterprise fund and agriculture development funds. They are blaming banks for asking borrowers for collateral and 3 month bank statements – terms which were not spelt out in the funds. from an offline story from the East Africa:

CFC Stanbic bank pre –merger comparisons

Diamond Trust acquired a majority shareholding in Diamond Trust in the just concluded rights issue.

Equity Bank
– Looking to enter the money transfer business
– To buy Housing Finance bank – what do the bloggers say?

Family bank got admitted to the CBK bank clearing house earlier in June, just a few weeks after being licensed. Family took advantage and pressed for an exemption (on a two year waiting period), similar to that granted to Equity Bank when it also became a bank. from an offline story from the standard

National Bank is seeking to commit Ketan Somaia to civil jail over a 17 million debt

Pyramids schemes continue to
thrive despite numerous warnings. However, some schemes feeling a cash pinch are passing the blame to the central bank who are limiting the interest they can pay depositors to 10% p.a. – before they were paying over 10% per month.

Kutwa Tuesday – June 26

Uchumi revealed: Shedding some light on the Uchumi bond proposal, the receiver manager has stated that the problems that shut down Uchumi had more to do with management style than the market conditions. The newspaper says that the 650 million to be raised, 280 million will go to pay suppliers & creditors, 23 million interest on (bank) loans, 52m to pay terminal benefits of staff, 200m working capital as the company plans to open 3 new branches in Mombasa, Nairobi, and Kisumu.

The article adds that all suppliers have been paid for deliveries made in the last 12 months i.e. the company is profitable. The company had sales of Kshs. 1.3 billion in the first quarter of the year and had 2.8 million shoppers visit their stores. Sarit is their best store with April revenue of 90 million followed by Ngong Rd hyper with 68m (last was Eldoret with 8m) from an offline story in the financial standard.

Note: even if they re-list, won’t they be in the same boat as NBK and be unable to pay dividends for several years?

Rights Issue: Olympia’s rights issue was formally announced today with an offer for shareholders to buy 3 shares for each held.

Newspapers: New newspaper from the KISS team – called the Nairobi Star and billing itself as Kenya’s first full-color daily newspaper launches next week
– But what happened to the Kenya Times website frozen on June 8?

Trade not aid: According to an Oxfam report subsidies are responsible for poverty among African cotton farmers.

Political worm: Raila Odinga gets unfairly blamed for a lot of things, but he is not responsible for a malicious computer virus bearing his name that has caused IT admin’s some headaches this month

uh oh: Why is Obama’s campaign getting stuck?

uh oh 2: Sad to read that former track darling Marion Jones is
almost broke. Even though she wasn’t a big spender like Tyson or Jackson, legal bills fending off drug allegations have taken their toll on her finances.

Uh oh 3 & 4 : Zimbabwe to do a takeover of foreign businesses as Uganda parliamentarians have given Barclays, Sheraton, Kakira Sugar, and Uganda Telecom one year to float part of their share on the Uganda stock exchange.

War what is it good for? Is there a difference between Somalia, Darfur and Palestine?