Thursday, April 10, 2008

Regional IPO Tales

Undugu gani huu?: One of my favorite entertainment sites is Bossip with its catchy headlines, like Making it Rain on These ****, Jesus Take The Wheel, and ** sit down, all of which apply in this case, but the best way to answer this story is BROTHER PLEASE! - while Uganda and Rwanda have joined thousands of Kenyans embracing the investment vehicle that is the Safaricom IPO, it appears the Bank of Tanzania is preventing Tanzanians from buying shares in Safaricom through the Dar es Salaam Stock Exchange. (hat tip RO)

Africa investment resource: africanshareholder.com is a great site to keep up with investment happenings in Africa.

Celtel IPO On: Sadly, not in Kenya, but in Zambia starting at the end of April – with 20% of the local subsidiary on offer.

Executive privilege: one reason that ministerial seats/portfolios are in great demand in Kenya is the power that comes with then such as the authority to insert one’s buddys' names on state corporation (parastatal) boards and these become law once they run in the weekly Kenya gazette. Sometimes one can even create new boards such as the new Brand Kenya Board which has been formed to market Kenya in the fields of tourism, investment, creditworthiness and international relations.

4 comments:

Anonymous said...

Here is the village Stock Brokers view:

I am no expert in financial ( and especially IPO) matters, but here are my thoughts about the fears/falsehoods of the Safaricom IPO.

(i) Why are they selling it so low or is that the worth?

They ( them ) want to buy it cheap. And they want you to support it, so they let you also eat a little. Say you get your 2,000 shares. You own (0.0000565% of the 25% of safaricom). Each of them get their 100m shares. One of the them now own 2.85% of 25% of safaricom. He has 10,000X more than you. Based on this transaction alone, his life is gonna be improved 10000X yours! If the shares were at Ksh 30, he would not buy as much.

(ii) Will i make a kill?

They do not care whether you do or do not, as long as you think you will, they are happy. They are waiting to snap up what you are willing to sell. Now, if you sell at Ksh 30 ( look my shares increased made 600% !), they buy them all at $0.5 a share. That my dear, is still a bargain for a profitable modern phone company. Now he has 200m more shares. He owns 9% of 25% of safaricom.

(iii) The shares will drop below Ksh 5 after listing.

Not likely, surely Ksh 5 is low enough. But if they did, much much better for them. As (ii) suggested, they are waiting to snap them up, so, that is the best thing that could happen to them. If the shares drop to Ksh 2.5, you may start thinking, well, let me let them go before it gets worse, and rush to sell. Your loss. Wise investors buy when the people are panic selling.

(iv) I do not know who owns Mobitelea, so i suspect the deal.

Odegle Nyang coudl not have said it better:

are you going to stop buying this share from GOK just because you dont know who the other owners are? and when you normally buy shares at the NSE, do you normally insist on knowing the others million shareholders before placing a bid?

Same question: Are you in the US? Do you own mutual funds? Do you know who else owns the same funds? Do you know that some of the investors brought money from dubious ( drug, blood diamonds, etc) gains? Do you own KenGen or EABL or Unga? So does Pattni, Somaia, Biwott, Moi, Kabuga.

(iv) Why allow foreigners to buy public property so cheaply?

Let us assume safaricom is as valuable as they say. Why allow foreigners to compete with Kenyans at such a low price? We all know, the best way to kill 2 these two birds with one stone, is to sell to the retail kenyan public as much shares as they need, and let the foreigners buy it from the public after listing. Then you are assured of post IPO price increase ( and mwananchi gains) and Kenya gets $$$$ from the outsiders. OK, what did we say? These foreigners are them! That is why they are allocated a huge portion. [ Who knows, perhaps, when the foreigners are ready to send their chapa to pay, the $ may strengthen vs the Ksh. Keep watching ]

(v) I have principles, this deal is not clean!

The duly elected GOK were adamant in selling this public company ( including your portion, despite your protest) and they have. Perhaps you can still protest by buying and keeping your share of the company, and using your proceeds to do a good cause. Remember, the company was paid for by you. If "thieves" ( Mobitelea Ventures Ltd, Vodafone, they ) steal from you, and they offered to return a micro portion of what they stole, would you reject it?

(vi) How can i protest this?

The best way would have been to protest at Safaricom by public mass action whereby we all say, "we are not using safaricom unil Jopseph tells us who Mobitelea is and Kimunya makes everything transparent". But, we are Kenyans, we are ignorant that we posses such powers, and we plain do not just care, as long as we make a few Shillings killing.

But, you can still protest, modestly. If you believe the foregoing arguments, then the best way is to buy the shares and dig in for as long as it takes. By doing so, you will deny them the chance to grab more of this property cheaply. OK, look at it that the money you put in (10K, or 50K) was lost. But then again, no gain without risks.

(Vii) Bottom line, this is the new open Land Grabbing

So, you see my Friend, this is the new Land Grabbing. Moi and his boys used crude methods ( though they wisened up towards the end- Mobitelea etc). Their MOD was: all for me, nothing for you. But these new boys ( Kimunya, Stanley, Jimna, Jimmy, John ) they are smart. They do it openly, and with your blessing. 200,000,000 for me, 2,000 for you. And, because we are all greedy ( and are Land Grabbers at heart ), we bite.

(viii) My call: a buy

So, i will write off 200K, put aside 20K for the IPO, and 180K to wait for the villager to to sell his. If i lose my 200K, at least i will have help inject $3K into the KE economy.

Girl in the Meadow said...

WE should take Anyang Nyongo to TZ, he is a socialist at heart.

Unknown said...

Banks - my question from the previous posting, with the Undugu out of the IPO, is the 2M marks still attainable? Anyways their absence is king of a blessing to me.

toiyoi - of the pricing, ealier posting in this blog, showed that the Kes 5 of safcom is actually over priced, considering a par value of 5 cents. I do agree with you that we are being taken for a ride. I do not care about Mobitelea, I hope they sell of their share when listed in the NSE but that is unlikely.

Chipongwe said...

I think the safaricom prospectus is bad quality in terms of layout for the fees that are being paid - and why do you have to download the prospectus before viewing it - this costs in bandwidth - check out www.africanfinancials.com for free annual reports on all listed companies in Africa in interactive format - FOR FREE - qet with it corporate kenya and corporate Africa use the web to lower costs

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