Tuesday, March 18, 2008

IPO Day 3: Mostly Safaricom

- What do you know? The IPO's official site is inactive/inaccessible a day after going live.
- For anyone new to Safaricom here’s how they became so successful

News Bits

- Safaricom has introduced an airtime voucher worth just 20 shillings (~$0.30): what does that smaller sale unit say about the economy?
- Bargains: Safaricom has halved the price of blackberry and is also selling Samba Modems for just Kshs. 3,000 ($42)
- Air-wars: Good for Kenya Airways (KQ); Delta Airlines (US) has delayed their new service from New York to Nairobi (scheduled for June 08) to start in December owing to current market conditions. Bad for KQ; Emirates will start passenger services to the Guangzhou (China) in July 2008 four times weekly and convert to daily flights from December.
- Why would Coca Cola introduce a Fanta Lite and sell it in the same bottle & packaging at 50/= instead of 40/=

Jobs: Available at Safaricom and Google, while regulator, the Capital Markets Authority is still searching for a chief executive amidst the region’s largest ever IPO.



Banks Quick question i just read that analyst in kenya are saying that the shilling is strengthening against the dollar and that safaricom will help with further gains.isnt it a the fact that the dollar is declining and not the ksh strengthening. Kenyan analyst should start judging the kenyan economy and shilling strength against the Euro.Investors are shifting to gold and the euro world wide. I wonder how educated kenyans talk about a gaining shilling on the dollar when the dollar is in free fall.The low price being offered by safaricom is an indicator something is wrong with the kenyan economy . Tour companies should also stop selling long term packages at dollar rates . I worked in the financial sector things are not good with the american economy and the dollar

FoodMerchant said...

Thanks for posting the link to "success fators" Missed that before. Is their ARPU still double that of their competitor? That would be quite an achievement especially if I assume they've been adding to their subscriber base the last couple of years.

inspectordanger said...

The official IPO is not inactive. You can't just apply for share yet until the opening date.

Anonymous said...

People with Bank Guarantees should be given the option of paying AFTER ALLOCATION.

The current "upfront payment" method is DRACONIAN and ILLOGICAL.

Why mess up other parts of the economy just because of a single IPO.

Central bank had raised this issue last year - and it seems to have been ignored!!!

Maishinski said...

My view - response to "Walk the walk"

Shilling v/s dollar:
KSH is not pegged to the dollar. Dollar has only been a point of reference. Last year KSH appreciated against all other currencies. That wasn't about the dollar. Kenyan Analysts are spot on my friend.

Judging from your article, your mind is still colonised.

Low price of Safaricom Shares:
Price is for mass appeal. Why?

1. Politics: Euphoria of making small windfalls will speed up National healing. Perception that Rich-poor gap is narrowing.

2. Greed of Brokers: An IPO should never be targeted at the Masses. However our Stock Brokers (doubling up as IPO "advisors") know they make a COMMISSIONS on each buy/sell transaction. The more post-ipo speculators there are - the more Cash for brokers!

3. Local uptake: At that price - you can guarantee that locals will oversubscribe. This may or may not be a good thing depending on demand/supply by foreign investors when it hits secondary market.

4. Fiscal Mopup: There's excess liquidity in the Kenyan market. This IPO will mop it up to a large extent - albeit temporarily since we're likely dealing with over 80% speculators.

There has never been an IPO in East Africa for a successful company with ROCK SOLID FUNDAMENTALS - yet all IPOs have traded high on their first few days. Why?

The only bad thing about the IPO is the HANDLING OF REFUNDS. That just stinks. They should let individual High Net worth investors pay AFTER allocation.

Luther M said...


A question and a comment:

On Kenya Airways - my gut feeling tells me they tank on March 31st when they close their books - I'm thinking there is no way they can avoid a loss -what do you think?

Comment - Walking the Walk -- Please understand that most major currencies integrated in the world economy that are not backed by commodities are down and will continue to be down.

The dollar is down yes but so is the Euro - and Mervyn King over at the Bank of England isn't sitting too pretty either - that currency has also taken a beating.

Australian and New Zealand currencies which are commodity backed will however buck the trend and hold firm when gauged against the shilling

Maishinski said...


1. Rogue brokers trade in IPO funds before issuing refunds.

2. Retail investors are hurt the most by the delayed refunds.

3. Negative economic impact of liquidity crunch

4. wild currency swings as peculators engage in high gear.

5. There have been cases of delayed cheques, lost cheques - or outright dissapearance of small investor's funds.

6. Unproductive time spent processing refund disputes and court cases.

7. Destabilise the economy.

8. Cost of processing refunds is unnecessary and ridiculous. Instead of throwing funds down the drain, Safaricom and Treasury should donate the money to good causes (e.g. Rehabiliation of street families)!!!

Payment after allocation should be open to everyone who can provide a bank guarantee.

Dyer and Blair - HELLOOOOO?????

bankelele said...

WALKING: I try and also keep the Euro in perspective. But I have always argues that the Euro is so poorly ‘marketed’. I don’t think many people have even seen a Euro note or coin. They need to make an effort to become the government, tourist, or business community currency of choice for forex, not the dollar. As more companies start to price oil in Euros this will shift and Kenya Airways is one company who suffers from weak dollars and should consider Euro pricing

FoodMerchant: It’s over a year old and MJ was bragging, but it’s a good inside look at the company until the prospectus comes out

Inspectordanger: site is back up today, but was down yesterday. I expect the prospectus to be there next week.

Anon: only corporates will get that option

Maishinski: interesting point. Since this is not an election year issue anymore, they could have raised the price of the offering. Even a minimum price of 20,000 or 50,000 ($700) would have been over-subscribed. Safaricom will join Kengen with a nightmare shareholder list of almost half a million investors

Luther M: they would have had a rather tough fourth quarter considering the politics and empty flights to Kenya from late December

Broker offices have been very empty from November last year, until the IPO. So they need those commissions.

adam cartwright said...

banks coop bank to go public this year. is there a difference btwn offer for sale and ipo?

adam cartwright said...

more on coop bank at www.panderosa.blogspot.com

coldtusker said...

Brokers in for a windfall... little work from them...

KCB Rights, then Co-op bank

2009 is another big one... Nakumatt

Anonymous said...

i understand economic nationalism but i think a safaricom IPO is a bad idea. i think tthe shares should ahve been sold to a foriegn company for double the premium. i think this iPO is a masssive wealth transfer. as much as its been priced for 'masses'
the end beneficiaries will be the middle class. 'the masses' will loose out. the country needs more money esp after the post election violence.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

bankelele, can you comment of this post I just found on google about the safaricom ipo.
It seems I'm not the only person worried about this.

Anonymous said...

sorry I forgot to put the link to the post.


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