Friday, May 19, 2006

Kengen IPO refund to investors

I trooped to get my IPO refund today - and it was a bit scary passing some brokerages houses on Kimathi Street which had long lines of people stretching outside the building as they awaited their refunds. But, my stockbroker/bank is about two miles out of town which means the crowd is slightly smaller and I get better, and faster, service.

Every broker has a system for refunds but once I found myself in the right place, I gave in my details and then sat in a cool tent waiting for my number to be called. A waiter tapped everyone on the shoulder offering them a soda to which almost everyone quietly asked “how much?” to which he happily replied “It’s free, one soda each!”.

Despite the speedy service it still took about two hours to get my 0.000033% of the massive IPO refund. Since the volume of applications was unprecedented and the timetable strict, refund cheques were sent from KCB back without being sorted to brokers - who now had to weed out each refund cheque.

good/bad about banks
Generally refunds is easier at the bigger banks who have more space in their halls, more staff on call, and can quickly open new desks and teller windows dedicated to share matters. They are also able to process cheques, but at a fee. My bank offered to cash my cheque for 1,000 shillings (15% of my refund) - but I instead opted to make another long trek to KCB who did it for 200 shillings.

The CMA needs to set some ground rules for future IPO’s including:
- Brokers & institutions must demonstrate they have the capacity (space, competent staff) to handle volumes of new investors. It probably took each working investor an hour to buy Kengen shares and another hour to collect a refund cheque – productive time spent away form the office.
- Have standard fees for bankers cheques, and encashing refund cheques (and also for dividend cheques).
- Review and restrict lending for shares in future.
- Another loophole that needs to be sealed is that an investor can have as many CDS accounts as possible. This means that they can get the maximum IPO allocation (6,600 Kengen shares) several times over.

Banks have greater advantage in terms of offerign financial products. They have a captive audience (stuck in long lines)and are able to sell them other products including mortgage and stockbroking if they chose to. Recently, insurance companies have been asking for financial laws to be changed to enable their products to also be sold at banks.

So where did the money go?
Despite my earlier protestation that any dividend not re-invested is wasted my money is going to go towards day to day expenses, debt repayments and pilsner (I have encountered too many flat Tusker's of late). This is because the refund money is coming in the middle of the month, when most of us are very broke. Also there’s not much else to buy on the NSE with 7,000 shillings, now that Kengen shares already selling for over 30/= - so it's abstinence for now, till the next IPO.

17 comments:

gishungwa said...

Yaay for the Pilsnaer or piliscilla s they call it upshags.

Shiroh said...

I get about having 7000Ksh, brokeness. By the way i still like that post on end month.

Shares are expensive things. I was looking at just how the stock market is bullish now. A crush would make persons lose cash.

As a principle i cant buy shares worth over 150. the gains compare weakly to shares worth 20 which goes up. This is because price is per share. Meaning if i have 200 shares and each rises by 20 shs i have 400.
Kina barclays hardly rise by that much. And worse still now with 20k you have only 100 shares. Freaking hell!!!!

Now what i am saying.

VituVingiSana said...

Bankelele: What is you take on the allocation process that was UNFAIR.

Apparently, some favoured folks got their CDS accounts allocated by Tuesday so they could sell on Wednesday (May 17) whereas others don't even have their CDS accounts allocated by Friday evening (May 19). I smell something fishy as well as INEFFICIENCY...

Why was the IPO refund & allocation process extended but not for trading commencement?

The "lucky" few (Did eddy njoroge get his allocation on Tuesday? What about the Trans Century Group & its memebers?) were able to sell on May 17 thus taking advantage of the higher prices (40/- to 49/-) while the rest had to wait. What good is the refund cheque if I do not have my shares?

Apparently, the non-crediting of CDS accounts has affected multiple brokers BUT it is UNFAIR to those investors who want to sell are are treated as SECOND CLASS...

bankelele said...

gishungwa: piliscilla is smooth, but doesn't mix well with my daily glass of milk

Shiroh: spend the 7k with Gish - or I'd still buy HFCK even as the price drops below 20

VituVingiSana: Don't know about the energy barons, but at time of my redund, my CDS account was still uncredited (& my broker confirmed my allocation). Still, everyday I hear complaints from people who have been trying to sell uchumi shares, but their brokers can't make the trades, even if 1m Uchumi shares are traded daily! Stockbroker cliques trade internally it seems

VituVingiSana said...

Bankelele: Why does your bank charge you for cashing a cheque? It make no sense!

I have to say KCB is returning to being the People's Bank... On the other hand they are the ones who issued the refund cheques so they should have all relevant details!

VituVingiSana said...

Bankelele: This time I do not think it is the brokers' fault coz they can't settle if the shares are not credited to the CDS account i.e. they can't transfer shares that are not there!

There is a breakdown at the CDSC but they should have been given more time & the trading postponed 5 business days or until ALL investors allocated shares were credited with the shares.

Someone (probably associated with the robber, er, energy barons got their shares credited early so they could sell at 49/- while the current price is trending towards 30/-.

eddy must have gotten 200,000 shares multiplied by 49/- = KShs 9,800,000. Thats a profit exceeding KShs 7,400,000.

Something is fishy regarding drediting of shares to CDS accounts! If you know someone at CDSC then chances are you were given credit much sooner that is by Tuesday so you are ready to trade on Wednesday!

Ken said...

Getting a broker to really follow instructions is becoming quite difficult and challenging but walking into any of their offices you find 25 year old kids dishing out advice on what to buy and sell yet none can even explain the formula for present value of an investmentor how to calculate the PE of a share.

Anyway, my broker went out and bought kengen while i had actually requested for sameer. so much for this, i have a 7k cheque to collect now.

Anonymous said...

a couple of things are becoming clear - we need a competing stock exchange
- we need bette/proactive regulation
- or perhaps have NSE managed by a larger stock exchange e.g NYSE or JSE
-but most importantly we need information and better inofrmation technology

Anonymous said...

Stokebrokers in Kenya are the most unprofessional anywhere. I'll invest through NSE when they introduce direct trading or when I become "high networth" to pull strings.

Kibet said...

@ Ken... pole sana. hope your brokers decision pays off better than sameer.

@Bankelele... you need to tell which bank/broker this is who gives free sodas. I had to stand for almost 2 hours chilling for a (very tiny!) cheque. A soda would have really helped!

sassy said...

@at kibet- i also would like t o know which broker/bank is offering free sodas-african alliance perhaps.
I agree with Ken. some brokers are really...... let me not curse and still having a kid blahs some advise and you ask them a question which they have difficulty answering is frustrating. Most of them mismanage clients funds- you all need to be careful.
for example you deposit a bankers check with them and you wait to give instructions you will be surprised that the money was used to buy some shares which were later sold within a period of three days and they pocketed the cash. when you raise questions about your statement- about not buying some shares which were later disposed off youre politely told that there was a problem with the cdsc system but thats not true.woe unto to them if they didnot make a capital gain on them and your account has less money than deposited then you will be a given a cock and bull story until you threaten and the problem is solved immediately. Is this a crime according to the CMA or NSE regulations

DMX said...

Hello Bankelele

your site came highly recommended and I must agree that it is great.

I am distressed to read all ths stuff about stockbrokers and their tricks. But then again I was warned by a friend that one has to keep his stockbroker on a tight leash as they are no different from mechanics in Ngara!

If you are small 'fish' then stock broker will feed the great white sharks first!!!

I am pretty new to investing and would love to here your tke on unit trusts, I am sure it would make for interesting reading.....yes I bought into the BRITAK ( british american) dream boat.

bankelele said...

VituVingiSana: Bank charges because I caskhed the check right away - I did not want to wait 1 week while it cleared. I feel that brokers are where the bottleneck is in terms of crediting accounts.

Ken: pole. at least Sameer price still unchanged

Anonymous: I hope the blog interaction leads to greater awareness and information. Direct trading may not be in the pipeline though some brokers offer online account mgmt

Kibet: CFC

sassy: shares bought without owner knowledge seems not to be a rare event

DREAMWEAVER: Thanks & be sure to keep your broker on their toes

Mashatall said...

banks, what happens to investors who are abroad interms of the check refund? will we be able to cash our checks on this end? guess we have to ask you coz you are more competent than all the stockbrokers on the ground, and it seems like your customer service is highly needed among this un regulated brokers.am still chasing my clients refund money for the Kengen issue, and no one is shooting straight when i call my brokers on the ground. They do not even reply any e-mails and am forced to actually travel to kenya so as to set up a proper pipeline for my clients. But guess what,the day remote trading is allowed will be the end of these inefficient brokers, coz i will be able to place clients orders direct to the floor, thru an electronic exchange. its coming and its only a matter of time once live trading is introduced in june.innovation my friend, thats where we need to go !!

bankelele said...

Mashatall: The cheques were sent to financial instiutions/brokers (who are now as busy as they were during the IPO application period). Wait for a few weeks, while the crowds end before contacting them for your refund cheques. It would be best to bank the cheque in a local nairo account

roughalmasi said...

took four days last week at the downtown office of a broker after queueing minimum 2 hours daily and finally never got my kengen refund cheque. On monday i went to their headquarters talked to their troubleshooter who directed me to their operational manager. OM insisted i check friday since my cheque was still at KCB. I asked him to refer me to one who could give a better answer but he maintained there was no one else since he was the OM.He lost temper and went back to his office.while sitting with the other kenyans i got a brainwave. I then walked to their polite receptionist and mentioned the name of the director and she agreed i could see him. Instead of the director she made a beeline for the OMs office. i dont know what she told him, but next minute he came over and told me to wait for my cheque. needless to say i got it in the next thirty minutes! we are in trouble.

BHAVIT said...

I am NANALAL J. SANGHVI, fill the application of IPO FUTURE HOLDING LTD. I don’t get the Share of company & still I don’t get my refund. My application number is 2-1914033 and my bank name is Dena Bank, cheque number is 544582 whose amount is 48,960=00, dated 16th Jan 2008. I have done 2-3 mails & letters before one week, but i havent got any reply from there side. And, I have my demat account in J.M Finace. And he saying that, that is not our duty for refund.

My Cont Number:- 94271 52841,94267 76188, 99259 90277

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