Thursday, October 07, 2010

Idea Exchange: Michael Joseph, Serena, Lotteries

Michael Joseph: Outgoing Safaricom CEO Michael Joseph will have an informal fireside chat session at the Nairobi iHub this month ( details here on how to attend). It will be staged like one of the Warren Buffet town hall meetings, and he will take questions from the audience and talks about his legacy at Safaricom.

Serena: last Monday had the bell ringing ceremony to launch newly issued shares of TPSEA (Serena Hotels Group) at the Nairobi Stock Exchange (NSE) after the company raised 1.1 billion shillings ($14.5 million) from shareholders. The funds will be used for: development of 3 hotel properties in Nanyuki, Nakuru and Elementaita (through Jaja Limited), buy 51% of Upekee Lodges who own two properties in South Tanzania, acquire Mbuzi Mawe Tented Camp and Mountain Village (Arusha) and increase the group's investment in TPS Rwanda from 8% to 17% (through refurbishments of Kigali Serena)

Also at the launch:
- Amish Gupta of standard investment bank called for day trading at the exchange (with settlement at the close of business), which he said, would raise turnover by 150% at the NSE
- Eddy Njoroge, chair of the stock exchange called for more companies to consider using the Nairobi stock exchange for capital raising, noting that Serena were able to raise Kshs 1.1 billion in two months - faster than any bank loan of that magnitude. F. Okello, the Serena Chairman - who’s also a Barclays Bank director, diplomatically did not challenge that point.

Centum Diversifies: Results and resolutions passed at the 2010 Centum (formerly ICDCI) AGM were published in the newspaper on Monday. The extra-ordinary business approved by shareholders at the meeting included:
- Business of Reli holdings (a 100% subsidiary now called centum investments) which sold its shares in Rift Valley Railways for Kshs 265 million and paid dividend to centum shareholders
- Uhuru heights limited (a 100% subsidiary), which is developing a plot on Uhuru highway worth 35.9 million
- Runda Closeburn (a subsidiary) which is in the process of buying 100 acres of land adjacent to Runda for 1.16 billion
--> Used to be a shareholder of Centum, but lost interest when they became too vested in other listed companies that all investors had access to. Yes it is healthy for an investment company to have a liquid portion of the portfolio, but Centum, Olympia and other investment companies should invest in unlisted companies (railways, real estate, coca cola bottling plants) that not available to the public - that is their attraction.

Lotteries Galore Zain and Safaricom both have lottery claim to give away a million shillings each week. Zane actually had a press launch the day before Safaricom launched theirs, but did not go public till over a week after Safaricom Masonko 150 did. So did Safaricom pre-empt Zain? Or did Zain pre-empt Safaricom without getting all the necessary approvals or having all the operations in place? Anyway, Zain’s promo is to enhance their subscriber loyalty program, while Safaricom is to mark tenth anniversary of the company.

This week urban IT consulting launched Supapesa which promises Kshs 50 million of prizes’ and last month saw the conclusion of massive 90 million in 90 days. Mbugua Njihia wrote about the lottery, also known as Shinda Smart and which a Nairumor has it grossed Kshs 1.2 billion from over 20 million SMS messages received.

But the winners are genuine of the lotteries and appear in the newspaper clutching bundles of cash or weeping as they receive new car keys - I don't know any of them personally, but I know many faithful participants who remit spend a few shillings each day, sending in the daily lottery SMS and all hoping (& praying) they will be the next winner.

But from what I know about gambling & lotteries is the house (organizer) is always the real winner, so it seems companies have landed on a new money making scheme based on unrealistic public expectations and naivety about the odds of winning prizes.

1 comment:

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