Mea culpa Eveready
I was wrong in estimating diminished interest in the Eveready IPO. 200,000 Kenyans applied for shares in the company and will each receive about 20% of the shares they applied for.
“Corporates” will only receive, at best, 17% of the shares they applied for, but are assured of much better allocation in the about-to-end Mumias offer which closes on Monday.
Bad loans for shares
I was also wrong that no banks will advance loans for Eveready shares.
This still happens, but with less fanfare/advertising than was seen with the Kengen IPO in March. IPO loans are not that attractive to banks since most offers are over-subscribed leaving borrowers with much fewer shares than they applied for – about 20% allocation on average. Also since Kengen has stuck at about 3X its IPO price and Scangroup (2X IPO price), banks are taking on some risk in undertaking such lending. E.g. Say I took out an unsecured personal loan of 120,000 shillings to buy Kengen shares (for 36 months at 19% interest). After the IPO I’d get 2,000 shares whose value of the past few months has been between 60,000 and 72,000 shillings. Meanwhile I have to pay back 150,000 shillings to the bank over the next three years.
Banks need hawkers
This week my bank ATM confiscated my card since it did not recognize my PIN number. I have not forgotten my PIN but the bank has a new IT system that for some reason only recognizes the original PIN, and not the PIN I had changed to as soon as I got the card months ago.
Anyway, I had to do something I dread doing today – visit/queue in the banking hall. It was a time wasting hour, 10 minutes of which I spent in the wrong line. Some banks have empty halls while others have crowded halls of customers who line up to deposit over the counter money. I got to thinking that maybe the bank should allow hawkers in to do some business and share the profits with the bank. They could sell newspapers, fruit, and airtime. Better yet, banks should stop their ridiculous no mobile calls rule for banking halls. If I have to spend a 1/5 of a working day in the bank, I should be able to do some other business over the phone.
Anyway I will be back in two weeks to collect a copy of my original PIN and resume using the ATM for normal banking
Where can you trade shares?
A rough estimate of the access to stockbroking services reveals that Nairobi (and other urban centers) have an undue advantage over rural folk in terms of stockbroking services. While IPO shares are sold at banks throughout the country e.g. KCB, for normal share trading one has to issue a stockbroker.
Like with urban bank customers (who are net borrowers) compared to rural customers (who are net savers) the rural shareholders are at a disadvantage in their access to stockbroking services. On the other hand, they trade much less (earn less commissions) than urban shareholders – preferring to buy and hold shares for dividends, bonuses and AGM goodies.
All brokers have office in Nairobi (including 3 for CFC and 2 for Suntra) while the rest of the country has brokers spread out as follows: Mombasa (Apex Africa, CFC, Dyer & Blair), Naivasha (CFC), Nakuru (Apex Africa,
CFC, Nyaga), Eldoret (CFC), Kirieni (Apex Africa), Kisumu (CFC), Nyeri (Nyaga), Thika (Nyaga), Machakos (Nyaga).
Recent trend Over the last month, Discount stockbrokers have opened offices in Kisumu, Mumias and Bungoma to facilitate the Mumias share offer.
Wishful thinking about oil
Reading this NY Times story about oil smuggling from Venezuela where oil costs $0.17 a gallon to Brazil where it cost $5 a gallon makes me wish that
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