Tuesday, March 14, 2006

All Kengen

All about the Kenya Electricity Generating Company (KENGEN) IPO through which it will transform to a public company that will be listed on the Nairobi Stock Exchange (NSE).

Opens: Monday March 20
Closes: Wednesday April 12
On offer: 659 million shares (par value 2.5sh) at 11.9 sh per share (minimum lot is 500 shares at 5,950 shillings)

How & Where to buy shares
All share buying now starts with the opening of a CDS account with any stockbroker, and after March 20, you can register and pay for your allocation of shares. In addition, several banks and credit institutions will even finance purchase of Kengen shares.

Over the next month, all their offices will be full of investors opening CDS accounts and placing orders for shares. Customer service for retail investors is marginal at best at most stockbrokers, but it will be even worse during the IPO period as overworked staff rush to beat the deadline.

However, I have a bias towards stockbrokers/investment banks, which enable online account management and trading. These include;

Dyer & Blair
Francis Drummond

Why buy?
Some KBW analysis of Kengen here.

Pro: Kengen is already profitable, still a monopoly, and energy sector shares are hot right now. E.g EA cables, KPLC.

Con: Have a single customer (KPLC), is a capital intensive company that can be affected by drought, will still be 70% government-owned & prone to interference (e.g. KPLC), lop sided IPO that favours employees, and past large IPO’s have taken many years for investors to achieve high returns e. g. KQ and Mumias.

Still, upside is good, but only as part of a balanced portfolio. I recommend an investment of not more than 1/3 of shares in Kengen, and everyday I caution people who are setting aside their entire savings/investments to buy Kengen shares to, in addition, seek value in other companies as well.

In the week since the Kengen IPO was announced, other companies have lost their share values as follows; Express -14.29%, Rea Vipingo -13.82%, Sasini -13.04%, Housing Finance -13.01%, Sameer Africa -12.94%, Diamond Trust -11.73%, National Bank -11.45%, Athi River Mining -10.27%, Uchumi -8.66%, Total -8.28%, Mumias -7.88%, and Kenya Airways -6.91%.

What Else?
Shares of the new Serena will be listed on the NSE staring tomorrow (March 15).


Jay said...

I knew there was a reason (apart from pints, which I hear you can drown at amazing speeds) that I wanted to meet you on Sato during the meet-up.

So, do you do private appointments?

bankelele said...

Who's been talking? (daily.nchiyetu.com is down now). I was only taking pints to catch up with the others.

Yes, I do accept appointemnts

Migz said...

Dude, thanks for this info. Trying to figure out how to get some chumz invested back digz and this has saidiad sana.

Great analysis of the KenGen IPO offering too..will be sure to throw a rao or two or more when i'm back in Nai as a token of goodwill :-)

vituvingisana said...

KenGen's website is lousy... there is little info on the firm's financials!

Nothing about the IPO...

Kamau said...

Are there any other players in the power generation sector, I read a few weeks ago in the economist a tender to provide diesel powered electricity in Kenya.

Mambo Yote said...

Enyewe Kengens Website doesn't appear to represent a World Class company. The latest news in their website is dated 3/4/2003. I wanted to redirect my Sis whose in the US to the site so that she can buy the shares but I am embarassed.

Anonymous said...

Hey bankelele, do you have any idea what's up with Francis Drummond? Are they overwhelmed or something? I have an active account with them and they are usually very good but this time they have ignored all my emails pertaining to my interest in Kengen. I even called them today (i'm based in the US) the number is engaged or does not go through!

bankelele said...

Migz: Also look beyond Kengen as there are other deserving companies

vituvingisana & Mambo Yote:

The Faida consortium (Faida Securities, ASHBHU Securities, First Africa, Discount Securities, Equity Bank)) has put up a website www.kengenipo.com - but no financial or prospectus yet.

Kamau: there are otehr companies liek Tsavo, Westmont, and Iber Africa, but Kengen produces about 80% of Kenya's requirements

Anonymous: All stockbrokers are swamped by crowds of investors, don't expect any timely response over the next month.

Anonymous said...

am really determined to buy kengen shares but then ma fear is that i might be late and am looking forward to buy them by the beggining of april can they get finished by that time coz people are really scrubbling for them.

bankelele said...

all IPO applications received by april 12 will be treated the same - doesn't matter if you applied on march 20 or april 10.


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