Tuesday, March 14, 2006
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
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%.
Shares of the new Serena will be listed on the NSE staring tomorrow (March 15).