Thursday, October 02, 2008

To Coop or Not?



The big debate now is if the Co-Op Bank IPO should go ahead this month or if it should be postponed. The Chairman of the Nairobi Stock Exchange has issues conflicting statements on the matter but appears to have bowed to the arrangers and the stockbroking community line that it should go ahead.

IPO’s in London and New York are beign deferred as they are unlikely to be warmly taken up, and here, the dearth of IPO's in the pre-Kengen was guided by the sentiment that they would not perform well in the then deflated markets. Even the giant IPO of Safaricom – was postponed till after the 2007 elections.

The timing is just not right, with two collapsed stockbrokers still being sorted out, Safaricom refunds not fully reconciled, and the Diaspora who were so enthusiastic about Safaricom still (i) worried about repercussions of the US financial markets turmoil (ii) real estate and (iii) feeling suckered by Safaricom's post-IPO performance which they heavily invested in.

Though the funds raised are targeted towards, mortgage finance, ICT and branch expansion, the Co-Op IPO should be postponed to at least next year. It withstood the 1998 Nairobi bomb blast and has turned round a Kshs. 3 billion loss to a similar profit in 6 years and a few more months won't make a difference. But as a fall guy of Safcom, I’ll revert to my IPO bypass plan when the Co-op IPO arrives.

Need for Capital; Co-op is a fast growing bank with a retail and branch base like KCB and Equity that requires capital to be shored up. The two banks that were most in need of regulatory capital - KCB and Housing Finance have already had rights issues in 2008, and other shareholders should prepare for the same at CFCStanbic, Prime, CBA, among other smaller banks.

NSE/CMA to note; In the wake of Crown Berger and Portland Cement share collapses, it should be noted that irregular share trades happen - even to Google - but the prices were re-adjusted and trades made at erroneous prices were then canceled.

Opportunities

Barclays graduate program: The Barclays Graduate Emerging Managers (GEM) is open

US Visa The DV 2010 diversity visa (US green card) lottery kicks off today and runs till December 1

TED Global 2009: Registration for TED Global 2009 at Oxford is open.

7 comments:

aaarrrggg said...

I appreciate how you share various opportunities. Just looked over at the Ted Oxford site and I couldn't believe that registration is a whopping $4000!

coldtusker said...

1) I think the over-subscription will be muted for retail investors.

2) Institutional investors could take up the entire issue

3) DVP will be used more extensively thus encouraging over-subscription BUT not a 'cash vacuum'

Anonymous said...

I dont think there can be an undersunscription. Lead Stock brokers will buy all outstanding lots.

Anonymous said...

what exactly did the NSE chairman mean when he said that the country could not afford having 10 billion shillings removed from the economy?

Btw - Doesn't he also own a brokerage company and isn't that a conflict of interest?

Anonymous said...

The inflation is biting hard and safcom was a disappointment (I am adding of its stock though for long term), the protection of revelation of current Coop shareholders,due to these factors coupled with other, I am also bypassing this IPO.

Anonymous said...

At 5billion I would not hesitate to flip the stock.

10 billion on the other hand is more difficult for the NSE hyenas to manipulate.

Following the hyenas is the key to NSE.

coldtusker said...

1st IPO I will likely give a wide berth... LOL...

worst perfomer was eveready... m glad I got only 200 shares!

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