Thursday, April 09, 2009

Mostly Equity – Suspensions & Housing Evictions

Equity suspended: Equity Bank was briefly suspended as a Central Depository Agent by the Central Depository & Settlement Corporation (CDSC). They have smartly escaped unscathed without answering any charges owing to:
- Playing one regulator against another the. The Capital Markets Authority (CMA) immediately reversed the ban, and reinstated Equity while terming the CDSC action as being against procedure
- By invoking the ‘small investor’ Equity said that they were in trouble because they had reached out to the small investor, lending them funds to buy Safaricom shares without collateral, and some people did not like that

Lost in the story is
- Equity split shares were supposed to start trading on April 14, but have been trading as split prices and have appreciated about 40% since the announcement
- The spat makes the CMA and CDSC look bad; by having a turf war (PDF) and fighting in public both claiming to fight for the integrity or interest of investors
- Why won’t Equity pay the minuscule amount or respond to the regulator (CDSC)?
- Comments made by the CEO at the bank AGM, bragging having the most investor accounts in the country coming back to haunt at a time when brokers are (i) broke (ii) resentful/envious
- More tales at the stockskenya forum

Equity moves in at Housing Finance: At Housing Finance, Equity is asserting its authority at the bank and Equity directors will now form 1/3 of the Housing Board of Directors, with Peter Munga (Equity chairman) Benson Wairegi (Equity vice chairman) and Babatunde Soyoye (Helios) all appointed in 2008 and who will all be ratified by Housing Finance shareholders this month.

During the 2008 rights issue at Housing Finance, Equity also increased their ownership stake from 20% to 24.9% while sister institution British American Investments (Britak) also increased from 4.9% to 7.5%. The rights issue also saw the National Social Security Fund reduce stake from 7.8% to 6.8% as the Government of Kenya which did not take up any new shares saw its stake reduce from 7.3% to 3.6%


Free Download Githongo Book - The most talked about book in Kenya - It's Our Turn to Eat - the Story of a Kenyan Whistle-Blower (John Githongo) by Michela Wrong will be available for download from April 10. yes you probably have a bootleg copy, but this is the real one from the publisher

- Invest in a Government of Kenya Bond to raise 10, billion shillings ($125 million), and earn a potential 10% bond return (PDF); minimum application amount is 50,000 ($625), and the offer closes 22 April. (better than Madoff?)

- Maker Faire Africa (MFA), a celebration of African ingenuity, innovation and invention, will take place August 13-15 at the Ghana-India Kofi Annan Centre of Excellence in ICT in Ghana's capital, Accra there are opportunities to sponsor the summit

- Jitihada is the Kenya National Business Plan Competition – (details) (PDF) that will be launched in mid-April.

Create a Logo for an international mobile banking conference and win $200. Details here, found at @whiteafrican

- Old mutual: Broker distribution manager, Mass market manager. Apply to by 17/4
- National social security fund managing trustee. apply through manpower associates by 26/4
- Capital Markets Authority: Assistant Manager (Legal Framework), Accountant, Assistant Manager (Investigations), Manager (ICT). D/L is 15 April


kainvestor said...

Maker Faire Africa also have a $250 logo competition. check the link

Maishinski said...

$250 for creative work (intellectual capital that they will use perpetually)?

It's ridiculous. Hope someone is smart enough to ask for royalties.

And what does an Assistant Manager do in this day and age? No, Really!!! Somebody help me to understand...

Rafiki said...

The book "It's Our Turn to Eat" is actually not available for free download, but it is democratically priced.

Montel said...

Hello Banks, how risky is it to do business in Kenya this year? The political climate is increasingly becoming hostile, taking into consideration the feeds coming out of Kenya. Not to forget, are the very venomous comments from our leaders and to a large extent, from fellow countrymen and women. I’ve been optimistic ... but now almost on the edge, crossing over to the other side.

Anonymous said...

Equity bank as a CDA is currently controlling one-third (33%) of all share transactions in the NSE. The orders are placed by their customers then Equity forwards them to either of 8 stock brokers for implementation. Once transacted,equity pockets 70% of commission while brocker pockets 30%. The effect is that Equity is squeezing the brokers at their own field,getting the lions share of commissions without having to invest in a brokerage licence(why buy a licence for Ksh 251 M when you can be a broker without being a stock broker ie rent one). The dominance of Equity in stocks is fast growing and the big boys must be scared. What would prevent them from offering the broker say 20% only (and retain 80% or more of commission) once they control 50-60% of the NSE transactions.

To avoid the intimidation by the NSE big boys,they may have to buy a broker but this would surely kill all the small brokerage outfits. If I had a brokerage firm,I would be the first to sell or else be forced to close shop once Equity enters the field.

Career Point said...

Mwangi should pay up the fees and stop intimidating CDSC. And i was rather surprised by the 'fast and furious' response from CMA. If only they responded to other issues this fast

bankelele said...

kainvestor: noted

Maishinski: $250 not much in creative East Africa

Rafiki: tahnks, correction noted - the book is not free

Montel: tough to say, but trying to do a post on business climate soon

Career Point: they should pay & comply instead of using political muscle

Maishinski said...

Kenya needs change. Urgently.

Truth be told:

Currently Kenya represents a high risk investment destination thanks to our beloved political "demi-gods" for whom people will do anything.

1. If you start a business, location is paramount. Your premises can be burnt to the ground at any time because:

a. University students are not in the mood for exams.
b. University students want better food.
c. University students want to wear miniskirts.
d. Someone thinks you rigged elections because of your ethnicity (or the Manager's ethnicity)
c. Too near a gov building and someone implicated in corruption burns the gov bldng to destroy evidence.
d. Tribe x claims ancestral heritage on your premises.

2. If your premises are not burned, they can be demolished because:

a. Your title deed is not valid.
b. Your title seems valid but 12 more people have title deeds for exclusive ownership of the same property.
c. You discover that you built on a road reserve.

If your premises are not demolished then:

a. You can be robbed at your business premises any time of day or night by gun-toting thugs.
b. You can be robbed outside your business premises at any time of day or night.
c. You almost certainly will get robbed at least once when you arrive home from work.

If you are not robbed then:

a. Your local stock broker will steal your money.
b. Your local politician will want to be GIVEN shares in your business.
c. Your local authorities want something small - else... close shop.

If you go to court...

a. Court clerk wants something small
b. Judge wants something medium
c. Your lawyer wants something big
d. Files dissapear in the meantime
e. 10 years minimum for the case to be concluded.
f. File dissapears after 9 years - just before verdict is given by a 99 year old partially blind judge, hence start all over again for another 9 years (judge dies - hence start again for another 9 years.. etc etc).

If you seek working Capital from a bank

a. They wont give you. The fact that you need it signals trouble for them.
b. They will give you provided you provide 200% security a personal guarantee, some other guarantors and a recommendation letter from you great grandmother.
c. Then you will stil pay 15+% interest on the fully secured loan

etc. etc.

Is it totally hopeless? I think not. Some industries may be relatively immune to self-destruction.

a. Knowledge industries (e.g. Software outsourcing)
b. Other service industries - especially those that appeal to the masses.
c. Industrial investments / Factories far from Schools, Universities & Residential areas. Some kind of industrial Zoning perhaps.
d. Business/Office parks outside CBD and far from schools and residential areas.

Keep in mind there's no crunch in Kenya. Our problems are internal. Boils down to lack of LEADERSHIP. We still have colonial masters (they just happen to be African) and TRIBAL CHIEFS.

My 2 dollars worth.

Anonymous said...

More politics @ stocks kenya...

Joe Aldeguer said...

i love your blog.. great article.


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