EABL 2008 AGM

The 86th Annual general meeting (AGM) of East African Breweries was held on 30/10/08 at Safari Park. The actual meeting business (passing of accounts, election of directors, and approval of auditors) all took about 10 minutes. There was only one question on the accounts and the rest of the meeting was left to a myriad of shareholder questions.

Why Financial Markets Crashed: the meeting began with a talk from the former chairman of the Nairobi Stock exchange Kibuga Kariithi (Director Afrika Investment Bank). He traced a path of American economic exuberance, greedy investment bankers, sub-prime-mortgages, careless insurers which all led to a liquidity crunch and loss or confidence in the markets – eventually reached Kenya

He exhorted EABL shareholders that their company was strong, with growing sales, profits, products and almost 7 billion shillings in the bank. He said the market would remain so for a few more months, maybe with a few more bank crashes, but the fundamentals of EABL and other companies were strong and this was a time for shareholder not to panic or sell, but to consider buying more shares.

Mini-controversies
Crap Calendar: one of the goodies handed out was a (single-sheet) wall calendar. Which was not well received by several shareholders. It was called, cheap, not in keeping with the image of the company, not as good as the one which was given to distributors, eventually even the chairman had to admit that it was a poor quality item.

End for Chami?: Mr. Chami is a (small) shareholder in almost every listed company and a feature at almost all NSE-listed company AGM’s held. He unusually is the first to ask any questions and almost all directors know hi. He usually asks but occasionally hits the mark. Today he got off to a bad start giving a 5 minutes speech that led to a round of boos by shareholders. When he finally got to asking questions, he was challenged by the chairman on the accuracy and validity of his questions – and told not to waste the time of the other 700 shareholders present if he had no questions. Hope it does not spread to other meetings

Mr. Chami
Trivia some questions asked by shareholders
- Start with prayers
- More environmental plans; will consider energy savings from steam and have participated in forestry activities in Ndakaini and may look at maul when government sorts out the matter
- Unclaimed dividend: a bill has been prepared on unclaimed assets that will soon be in parliament after which companies will get guidelines on compliance
- Is Alvaro alcoholic? no it is not
- can dividend be cashed at banks?
- give more bonus shares please?
- give more dividend to long term shareholders asked by an old lady who has been a shareholder for 35 years)
- can we have cheaper AGM’s? e.g have the meetings at a venue like Kasarani Stadium and serve African foods, not expensive hotel foods that give high blood pressure!

Goodies: T-shirt, Calendar (see above), Safari Park Lunch box [with meat (big chicken slice, cake, beef & cheese sandwich) fruit (banana, apple), drinks (yoghurt, alvaro, water, orange juice)]
Lunch on the controversial calendar

Safaricom 2s

Three weeks after Safaricom’s share price dipped into the 3 shilling range the share is on the verge of tumbling into the 2/'s [$0.025] - down from the IPO of 5/= and brief high of 8/=.

what are others saying?

Coldtusker points to some deals that can be cut cheaply with NSE shares.

KCIG states that a bear market should be no big deal for serious investors.

Analysts are still producing reports on NSE shares to buy (Access Kenya). What about when to sell?

Everyone’s doing it, so throw more stones at D&B - Dyer & Bair who structured the Safaricom IPO.

Shut down the NSE?: Closing the shares market to salvage what’s left was proposed in Nigeria and now a stockskenya thread has taken it up here as well.

Could be worse: Liquid Trader gives insights on the SA economy that are not easy to decipher by watching CNBC.

Another IPO you say? Co-Op Bank opens tomorrow. No prospectus out yet, but here’s another PDF from the Bank MD.

Looking for work? here’s a great new local Kenya job blog.

Bank Tales II

Maina T kind of started this thread with a review of the P/E correction of Nairobi Stock Exchange (NSE) shares.

NSE: ½ full or ½ empty? - to take it further, how are NSE shares today compared to last October? If you considered them fairly priced then, you are frowning today, but if you considered them over-valued, are you smiling today?
estimates
- Shares that have appreciated since October 2007: 4% - BAT Scangroup, 3% - Access 3%, 1% - Unga
- Shares that have depreciated since October 2007: (83%) – Mumias (74%) NIC (59%) Nation Media Group, CFC (55%) - Housing Finance, (53%) – Sasini (51%) – Kenya Airways (47%) - Sameer (45%) – Kengen, Centum (44%) - Eveready (43%) - Williamson (42%) – Express, Jubilee (41%) - KPLC, Kenol
- Banking sector: Best (4%) - NBK, worst (-74%) - NIC, sector average is -32%

Interesting that despite the world financial meltdown of late 2008, the Kenyan financial sector is faring no worse than other sectors (agricultural, industrial) which are all down approximately 1/3,and remains the sector most likely to produce super-profits again this year. Best performing sector is commercial services (excluding Safaricom only listed in June 2008) which is down 20% from a year ago

Cheap M&A The depressed NSE prices bring out good and bad banking opportunities.
- Good for anyone speculating on buying into a Kenyan bank. The Helios stake in Equity is priced as almost what it was when the deal was signed, while the CFC/Stanbic merger is worth ½ as much as it was a year ago.
- Bad for the Government who are hoping to raise funds from further sale of NBK and Development Bank of Kenya share. It also raises a question of how Co-op Bank IPO shares will be received i.e. if you enter a train going down hill and you want to go up hill, where will you end up?

Family Bank a recent stockskenya discussion could indicate that a listing of shares could happen soon.

EADB: sad tales on the East African Development Bank.

Bank Tales

(4) The Nairobi Star newspaper reports today that the ravenous Libyans are going to buy Equatorial Commercial Bank from Naushad Merali and other shareholders.

(3) T24 Rules: over a week ago KCB converted to the Temenos T24 banking system with some customers experiencing hitches - and next weekend it will be the turn of CBA to do the same.

(2) (Nairumor II) Minister(s) are itching to get licenses to open their own banks (hopefully not a return to the days of political banks)

(1) ( Nairumor I) that the Co-Operative Bank IPO will not be sold by all stockbrokers. Co-Op bank will do investor registration and most of the processing at their own (52) bank branches, with assistance from only a few brokers. That could be bad & painful news for stockbrokers as the low volumes traded and the depressed NSE this year have meant less than projected commissions & income.

Reassurance from bankers

The downward trend continued at the stock exchange again this week to Friday. So how about some banking news to reassure nervous investors?

KCB: are first out of the blocks with their third quarter results. Some shareholders might be peeved about having forked over Kshs. 25 a share in the rights issue a few months ago, only to have the share trading at below 20 this week.

How have they performed? Compared to a year ago, assets are up 67% and profit up 66% - which should go on through Q4 of the year, and hopefully the bank will reward patient shareholders with 2/3 increase (or more) in dividends after December. After three quarters, the bank has already passed their full year income mark for 2007, and aggressively loans are up over 50% against just 15% increase in deposits.

Equity: are usually one of the first banks to publish quarterly results, and have been known to run them in the Saturday newspapers, so we’ll see by Monday.

Co-Op: a week to the IPO and the media push is on, though subdued compared to past NSE offers. There’s a pre-prospectus document (PDF) at their site published a few weeks ago. See also analyst Robert Bunyi’s perspectives on the IPO (Hat tip Ratio Magazine)

Safaricom (M-PESA qualifies as a bank!) CEO Michael Joseph does his part to reassure retail investors about their Safaricom share prospects going forward. and regardless of their current price.

Opportunities

most from the Daily Nation
- East African Cables commercial manager hr@eacables.com 13/11
- Econet credit manager see www.Adeptsys.biz by 31/10
- Government of Kenya (Ministry of public service): 112 senior personal secretaries, 126 personals secretaries. D/L is 31/10 to the PS by snail mail
- KCB: head of alternative business channels, manager – trustee services & compliance. 7/11
- KPMG: seeking several public sector & development associates (PSA01/08) apply through talentrecruit@kpmg.co.ke D/L 7/11
- Suntra investment bank: Chief executive (SIB-CEO/10.08) apply through esd@deloitte.co.ke D/L 12/11

from The Economist
- African Agricultural Technology Foundation: Executive Director Nairobi, Kenya
- IUCN: Regional Director for Eastern and Southern Africa Nairobi, Kenya
- KickStart International, Inc: Development Economist / Director of Impact Evaluation & Monitoring Nairobi, Kenya
- Africa Center for Strategic Studies: Associate Dean, Relations Professor Washington, DC
- eRwanda PROJECT: Lead Technical Manager for RCIP-Rwanda Kigali, Rwanda
- Africa University: Vice Chancellor Mutare, Zimbabwe
- Alliance for a Green Africa: Senior Policy Officer, Innovative Financing for Agriculture Nairobi, Kenya
- SNV: Senior Advisor Water, Sanitation and Hygiene -Nanyuki, Kenya
- Call for Paper - First Congress of African Economists

from the mailbox
Free Web, Domain and Blog Hosting in Kenya‏: read more but buyer beware

DiscountStockbrokers.com

Insight to a dot.com stockbroker

Discount Securities web site is still up, with today’s stock prices - its’ even more up-to-do date than other online stockbrokers sites. The site leads off with an announcement of the Restructuring of Discount Securities Limited:

we would wish to notify the public of the following regarding the much publicized DSL restructuring;
1. That DSL is not under statutory management; KPMG has been appointed to act as executive director in a corporate restructuring strategy.
2. That the stock brokerage operations of DSL shall continue as normal and DSL offices shall remain open.
- We encourage the DSL clients and other stakeholders to stay calm and cooperate with the new executive director

I came across several promotional materials from Discount and an aptly titled blog post abut Discount on the folly of running your mouth. It seems Discount spent and spent, and told, but not as much as they spent. They may have thought the Nairobi Stock Exchange bull run would continue forever, the IPO gravy train would never end, as everyone was opening a CDS account for their maid and grandmother to get allocated more IPO shares etc.



Discount had a magazine: I’m not sure how many issues, but I have the January 2008 issue – yes while the country was politicking, they published the January issue of the DSL Explorer with another bold title - Branching Out.

It was full of pictures of smiling staff at the new branch offices of the company. Discount seems to have opened up to 22 branches; they marketed their unique Country-wide Branch Network - and look how many offices they opened in the last two years (as contained in the magazine)



2006
February - Mumias (branch opened)
October - Kisumu
December – Bungoma

2007
January – Mombasa, Nyeri
April - Tom Mboya (NRB), Nakuru, Nyahururu
June - Fedha (NRB), Meru, Nanyuki
July - NHIF (NRB), Thika
September – Naivasha, Embu
November – Eldoret
December – Kitale

They were opening (fully staffed) branches faster than most banks; at a rate that made watchers of Equity, Barclays and Family banks uncomfortable – but those banks had assets, products, strategic plans. But it turns out there may not have been enough customers for these new broker offices/branches.

Mission, Vision, Values: All good companies have them, and Discount did too (they are still there at the web site), and all the branches even had individual goals



OUR VISION: To be a leading stock broker and investment advisor in the East African region, offering exemplary professional advice to both individual and institutional investors.

MISSION STATEMENT: To demystify the issues surrounding the stock market and facilitate accurate and well-researched information to ensure profitable transactions for our clients.

CORE VALUES
D-Discipline- We execute what we promise.
I-Integrity- We adhere to high ethical standards of business conduct.
S-Sustainability- We aim to develop and maintain possibilities that are consistent and long lasting.
C-Customer Satisfaction- We understand, respect and always put the needs of the customer first.
O-Operational Efficiency- We have a sense of urgency for all our processes and a strong bias for action.
U-Uniqueness- We value each others innovative ideas and are always looking for better ways of doing things.
N-Networking- We establish strong relationships with our clients and other stakeholders.
T-Teamwork- we value individual excellence and work as a team for the benefit of the firm.

They sponsored the marathons (Stanchart, Lewa), investor road shows, golf tournaments (Nakuru, Limuru, Railways, Karen) concerts, women’s forum [even negotiated to advertise at this blog]



Outlook: It seems to have been a wonderful company to work for, but it reminds me of some of the high flying, short lived dot.com companies who ran out of cash and eventually crashed.

Discount may have been bigger than Francis Thuo or Nyaga Stockbrokers, and so far, there's not much signs of fraud or rogue broking on the part of the executives or staff - except for NSSF shares



Maybe if the Co-Op IPO had been rolled out earlier, with Discount as a co-sponsoring broker they would have gained a few more months of business. And perhaps if it’s true, then maybe the CMA/NSE acted in time and that some investors’ money and shares may be found to be intact by the new management.

Mostly Centum

Last week the company CEO departed and the Centum (formerly ICDCI) directors postponed the annual general meeting (AGM) and payment of the year end dividend.

Today’s newspaper has a statement from the Centum Board asserting that:
- The management is firm, the company is on sound financial footing, and the departure of CEO Peter Mwangi had no relation to the delayed dividend and meeting. However, while Tony Wainaina (Mwangi’s predecessor) and Mugo Kibati (EA Cables) may have set a precedent for young CEO’s to enhance corporate performance and value and leave at the top, the timing & coincidence is not good.
- Statement does not address delay of the dividend which would amount to about Kshs. 248 million ($3.3 million). Without doubt, the conpany's investment portfolio is down this year (quoted investments - which should be easily disposable include about Kshs. 1.5 billion of KCB (but down from 2 billion ), Kshs. 422 m of EABL and probably a healthy slice of Safaricom) - but it’s scary that three months after a company declared a dividend, it would find itself unable to fund it.

Toxic broker:
- Centum’s statement adds that its listed holdings are not accessible to any (rogue) stockbroker, and the company had no dealings with Discount Stockbrokers
- A separate from the CMA statement today effectively states that the company is under receivership by KPMG – owing to corporate governance including poor strategies manifested by an unsustainable expansion plan (branches all over the country)
- A bigger scandal than Discount appears to be at the national Social Security Fund (NSSF) whose dealings with Discount are a lesson for fraudsters.

Best Kenyan corporate site
In the wake of hiding from questions on Discount, the Centum statements along with financial results from listed companies (Kengen, EA Cables and KPLC) have appeared in the newspapers before they were posted on the NSE site. And though the NSE won an African Investor award (for 2nd runner up - most innovative African stock exchange) website updates should be a priority matter

Probably the best bank, and perhaps corporate site in Kenya, with the most relevant, timely, updates has to be the Central Bank of Kenya website with their controversial/pro-active governor Professor Njuguna Ndung’u (and his media team) who post several statements, speeches, policy matters a week (read it and judge)

Co-Op IPO: After a stop-go debate the Co-op Bank IPO has been green-lit and will begin in about a week’s time with investors still digesting refunds and possible losses from the previous IPO – Safaricom.
Dates: October 30 - November 13
Share price Kshs. 9.50 ($0.13) each (for 701 million shares)

Related Posts
- Reasons to invest in Co-op IPO (or not)
- The last Centum AGM (February 2008)
- Saying farewell at AGM’s: in style (Barclays) or in shame (Kenya Airways)

Bank Safety Net

and other brief’s

Kenya’s deposit protection fund results are also out. They fund had about Kshs. 18 billion ($240 million) invested in government securities to protect depositors in case one of Kenya’s 45 banks collapses – and pay each account holder up to Kshs. 100,000 (~$1,333). The fund now covers account holders in the two new Shariah banks who were excluded a year ago

Lending crunch? wooing customers
- CFC/Stanbic - win out of the blue; open an account with Kshs. 10,000 and win one of 5 cruises, flat screen TV, digcam, ipods, satellite TV decoders (with subscription)
- Stanchart - take unsecured loan of Kshs. 750,000 or more and get a DVD player
- KCB – spend more than Kshs. 2,500 on your credit cards and you may win a DVD, TV, mobile phones or a holiday

Going regional Equity Bank hiring staff to work in South Sudan, while East African Development Bank is hiring staff to work in Rwanda

Mobile payments Old Mutual customers/fund investors can now pay their monthly subscriptions by M-Pesa – Safaricom’s mobile phone money transfer facility. Banks have already a ceded a significant chunk of the local the money transfer business to mobile phone, who are now expanding into investment and utility payment turf of banks.

Kenya Bank Charges

The Central Bank released the latest report of a Kenya bank charges survey (PDF)

Notes
- It’s a good read, which may lead account holders to check their statement and shop around for cheaper banks. However many account holders get one or two statements a year at most, so this may not be useful to them
- Also, though some banks score good points for low charges there are other aspects to customer - service to be considered in the choice of where to bank.
- One flaw in the survey is that it assumes that the banking act is applied and that no charges are levied on savings accounts - I’m yet to see a bank that does not
- This years' survey acknowledged bundled or flat fee accounts such as Move (from NIC) X from (Stanchart), Bouquet (Barclays), and Open (D-Trust)
- Customer who take loans calculated using the flat rate method end up paying more than the reducing balance method
- The final table shows a growing list bank automated teller machines (ATM) which are being established for customers to use. But if there are 3 ATM’s next to each other at Nakumatt Junction, 3 next to each other at Kenyatta Hospital and 6 at the international arrivals terminal of JKIA, the spread is not very useful.

CBK Profits

The Central Bank of Kenya last week published for the their ended in June 2008(PDF)

Notes

Return to profitability
- Had a net foreign exchange gain of Kshs. 54 million, compared to a loss of Kshs. 9.3 billion in 2007. This changed the profit picture and enabled the bank to post a profit of Kshs. 8,995 million [9 billion or ~$123 million compared to a loss of 386 million in 2007
- Total income of was Kshs. 14 billion, up from 5 billion. Barclays, Kenya’s largest bank had total income of Kshs. 18.9 billion) up from 5 billion the year before
- Will pay Kshs. 4 billion dividend to the government

Other
- Had staff costs of Kshs. 3. 3 billion (which would be third after KCB and Barclays if compared to commercial banks)
- Commission on sale of government securities dropped to Kshs. 3.1 billion (from 5.2b in ’07)
- Kenya has Kshs. 100 billion (~~1.37 billion) worth of currency circulating, compared to 90 billion in 2007

Vindicates Kimunya
- Currency printing expenses were Kshs. 403 million (down from 1.25 billion in 2007) and something which the former finance minister was crucified for in dealing with De La Rue
- Mentions the $45 million sale of the grand regency for which the payment is tallied

Ignore the financial news

Retail investors should ignore the financial news – and focus on their stockbrokers competence instead

The Nairobi Stock Exchange (NSE) is at a low point the year, yesterday it was the US markets, and today its markets across Asia (Japan, Korea) that have all dipped more than 5% in a single day. This is a concern for fund managers, pensions, and insurance companies, large local and foreign investors who actively trade to make profits,, surpass peers and meet targets [e.g. NSSF (bought KCB, stanchart) Kenya Re (bought KCB) ICDCI (bought KCB , sold EABL), ICEA (bought NIC, sold ARM, Total), Heritage (sold ARM, Serena), Old Mutual (sold NIC, Stanchart, EABL)]

But does it affect the average investor and should they even care about the NSE up’s or down’s? This is the retail investor crowd; The people who queue around the block for each IPO, who often make their first foray to the NSE on the back of IPO’s like Barclays, Kenya Airways, Kengen and Safaricom?

Through recent first time investors have gone into IPO’s with some unrealistic expectations (and which have perhaps fueled the sour mood in regards to Safaricom), retail investors are still largely buy and hold investors, who don't watch CNBC or read blogs or the financial press.

They don't actively trade in and out of their shares. They value dividends, splits, bonus shares, and of course goodies that are dished out at annual general meetings (AGM’s) like t-shirts and umbrella’s. A share looks good the first time they buy it, and they will stick with it. Year to year performance, sales and profits matter less than a consistent dividend. They are concerned about costs, but often in an us versus them scenario where a company should be able to pay more dividends if it cut its management/employee or administration costs.

The NSE companies they invest in are not dependent on their shares for borrowing, and so a drip in price ala Safaricom does not make their banks come calling. So just as bad news should not concern retail investors, neither does good news unless it involves a dividend or split.

Broker Issues:
(i) If Discount Securities (with 20+ branches) and other brokers who opened offices to serve (Kengen, Mumias) IPO crowds, then find later that these customers don’t trade (and generate commissions & income) how long would this position be sustainable? Brokers were better off using banking halls, supermarkets and other abodes to process IPO applications (as happened with Safaricom)
(ii) Went to my broker yesterday, and they are now marketing the Mabati Bond which has projected income of between 10 - 12% p.a. from the bond, but the minimum application amount of Kshs. 1 million ($13,700) is out of reach of most individuals, and not as affordable as the earlier Barclays Bond
(iii) Initially the regulators (CMA/NSE duo) attributed the problems at Discount to the global market collapse. But new media reports blame owner disputers for problems at the broker and a leading agent.

NSE: one step back, one step forward

Stockbroker closure: [website of Discount Securities]- another stockbroker may have gone under with doors closed and no more client processing until further notice from KPMG who may be the new receiver managers.

Like with other collapsed firms those-in- the- know (informed investors/insiders) took their money out of that broker and moved accounts before, leaving the retail rural crowd wailing. At worst, it’s the third broker to collapse in two years, at best this will be a bridge to takeover of a struggling broker by a commercial bank

Uchumi Profitable - Over the weekend, Uchumi continuing their turnaround plan published year end accounts (June 21008) showing a return to profitability for the company in receivership. However the net asset position is still critical and a strategic investor/new shareholder remains key, as the company will not be able to trade its way back to the NSE

Uchumi Financial Summary
June 08 ; June 07
Sales 6.79 billion shillings ($97 million) in 2008; 4.5 billion in ’07
Gross profit: 1,549 million ; 964
Operating expenses 1,254 million; 1,068
Finance costs 189 million ; 152
Profit before tax 106 ; (257)
Fixed assets 729 million; 840
Net current assets (553) million; (321)
Total assets 176 million ; 499
Reserves (-2 billion) both years

Safaricom 3s

Tracking the storm at 7, 6, 5, 4 and now Safaricom at Kshs. 3.70

Mobile notes
- Communications is perhaps the only significant sector that has gotten cheaper this year. Oh yeah also NSE shares are much cheaper this year
- Safaricom is fundamentally sound and performance on the stock market should not translate to the business side
- But Safaricom now has new competition from Zain, Orange and Econet with new offers that may cannibalize each other. Safaricom can’t possibly respond to each marketing overture from the newbies
- Competition will drive increase of (cheap) phone sales as subscribers add second and third phones e.g. Safcom for M-Pesa and Internet, Zain for cheap calls, and Orange for cheap SMS and even cheaper calls
- Safaricom ironically got nominated by Africa Investor Investment Awards for Privatization Deal of the Year ; other Kenyan companies nominated include Alliance for a Green Revolution in Africa (AGRA), the Ministry of Finance Kenya (for Credit Reference Bureau Regulations – relay? Are they original?) Kenya Commercial Bank, PricewaterhouseCoopers, Dyer & Blair, Morgan Stanley (for Safaricom IPO?), East African Development Bank (actually Uganda based), East African Breweries Kenya (for Best Employer), Evelyn Mungai (for Businesswoman, not TI Kenya), Mumias Sugar Company and KenGen (for Carbon Finance)

Take Crash Positions

The Nairobi Stock Exchange (NSE) halted trading today for 15 minutes after the index fell by over 5%. (damn: just as I'm ready to sell some shares)

Elsewhere:

Safaricom: AKS says that pre-IPO shareholders lockout window has ended - so now can Vodafone start buying up some Safaricom shares and stem our losses?

Equihealth while other banks are sleeping, Equity Bank leads the way again this time venturing into health insurance. They have four plans starting as low as 6,700 (~$100 a year that include pre-existing conditions, HIV/AIDS, maternity, dental, eye-disease. (wow, medical insurance is a minefield, but Equity can sets its own terms in the industry and change the rules in the medical insurance industry)

The EDIT plans are;
- Mango @ cost Kshs. 6,700 per person per family for inpatient (Kshs. 13,300 per person for in & out patient), covers up to Kshs. 75,000
- Passion @ Kshs. 8,500 per family (Kshs. 15,100 per person for in & out patient), covers up to Kshs. 150,000
- Melon @ Kshs. 16,000 per family Kshs. 27,600 per person for in & out patient), covers up to Kshs. 500,000
- Apple @ Kshs. per family (Kshs. 35,700 per person for in & out patient), covers up to Kshs. 1 million

Scangroup: (Bharat Bank) As part of the sellout employee shareholders are seeking shareholder approval to sell up to 25% of their shares during the lockup period which is supposed to end in August 2009

Real Estate Moment

This last post on Kenyan real estate produced a ton of great feedback, hence another one.

Home Expo
The 2008 Home Expo took place over the weekend at KICC, which was nice to attend, though it was strange that there was a simultaneous one (for home interiors?) as Sarit Center over the same weekend/period

Financers
- Standard Chartered: Up to 90% finance, Up to 20 year loans, decision in 48 hours. Also offer equity release loans
- Barclays: 14.5% interest rate, 10% down payment (reduced from 15%), and loans up to 20 years
- Housing Finance: have Start up plan (12 to 20 years),
House plan (5 to 12 years) and Ace plan (<5 years) loans for owner occupied, investment residential, equity release & top up, construction loans, residential plots, buy a plot & build.
- S&L: interest of 14% variable or 15% fixed, loans for individuals can be up to 25 years, while for companies & investment/rentals is 10 years, and estate development , just 2 years. In major towns they finance up to 90% for owner occupied and 80% for income generating properties (i.e. 20% down payment); while for rural properties it is 70% for owner occupied and 60% for income generating

Savings: S&L and the banks have various savings plans, while Bora real estate investment management (BREIL) were also represented with a plan starting at Kshs. 10,000 ($135)

Insurance: AIG Kenya were notable marketing home insurance packages that escalate to match the appreciating cost of home repair, include a domestic employee cover (DYK employers are liable in their house maids are injury or die?) and also cover the cost of trauma in the event of an attempted home theft.

Home Internet: Zuku (from Wananchi) vs. net@home vs. Broadband hotspots from Safaricom

Solar heating: at a time of record domestic electricity bills for consumers, alternative energy (mainly solar) products were on offer from Davis & Shirtliff, Solar Exide, and Sharp.

From the Blogs
- Funny Money Kenyan Entrepreneur questions the growing debt burden in Kenya, some of which is rel estate real estate, arguing that the numbers don’t add up. Meanwhile, there's an offline article in the East African by Joachim Buwembo that attributes the rapidly growing and appreciating real estate markets in east Africa in part to hot money that previously used to fly to Swiss bank accounts
- John McCain has 7 homes: I’m partial to Fahari Estate but this post by MainaT raises an interesting point about other towns (e.g. Nyeri, Kericho, Malindi) worthy of real state investment, for work or retirement.

Scangroup Sellout Part II

More details on the Scangroup sale of a controlling stake to the WPP Group (UK) are out now. The mechanics will involve:

- Investment of Kshs. 1.325 billion [~$18.2 million] into Scangroup (with Kshs. 400 million for working capital, Kshs. 650m for acquisitions, and 30% for in-house improvements including new ‘office space’)
- Existing shareholders approving increase in share capital from Kshs. 180 million to 240.7 million [~$3.82 million]
- Creation of 60.7 million new shares which will be offered to Cavendish Square Holdings (WPP subsidiary) at Kshs. 22 per share (Scangroup currently at 28.50). This will dilute existing shareholders stakes by about 8% each
- WPP get the right to nominate two directors and are locked in till 2012
- WPP will become largest shareholder at 27.5% followed by MD Bharat Thakar 20.6% and chairman Andrew White 11.93%
- Retail bail?; scangroup now has about 39,000 shareholders, down from 44,000 earlier this year

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.