Our high expectations about Kengen must ‘fail’ for the good of the country’s future IPO's and stock exchange.
Politics showed its’ hand when the share allocation was made democratic as possible. As a result institutional and foreign investors were short-changed in the process which was now tilted to favour wananchi. The hunger to own a new company, cheaply available at the stock exchange followed and the flames were fanned by banks, employers and financial institutions who availed easy cheap loan to borrowers to engage in the risky business of share buying.
Meanwhile, large investors set aside millions of dollars and shillings for months leading to the IPO, only to receive a maximum $1,000 worth of shares when the results were announced.
Future IPO’s may not be as popular with wananchi as Kengen was – and the government will need the support of these financial, institutional, and foreign investors to participate in these subscriptions e.g. of Telkom and other state corporations.
Most important is that investors need a reality check – to learn that there is no sure thing about share prices - (even Safaricom). If you buy a share at 11.90 today, to sell it at 60 tomorrow it is only possible if there’s someone who believes that it is worth 100, and so will happily buy it at 60. The same lesson should be applied to banks who engage in such risky lending – and can now see that there are investors who will not buy our shares at 60 or 38 or maybe even 25 shillings.
We all bought Kengen with thoughts of Kenya Airways and Mumias-like appreciation in prices, but probably forgot that these shares were un-loved until only recently, and languished for some years after their IPO.