The much awaited Safaricom Initial Public Offer (IPO) is finally out. The government through the treasury is off-loading 25% of it's shareholding, translating to 10 billion shares.

A share is going for a discounted price of ksh. 5 each with a minimum of 2000 shares, meaning an investor needs at least ksh. 10,000 to apply for the IPO.

65% (or 6.5 billion shares) will be reserved for local investors with the rest going to the foreign investors.

The offer opens on March 28 and closes on April 23, 2008. This is a nice opportunity to share in this seemingly sweet cake.

Good news for those who have been investing with Nyaga Stockbrokers-the Minister of Finance reported that measures had been put in place to ensure they were not left out of this lucrative venture.
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(Source: http://www.eastandard.net/news/?id=1143983315&cid=4&PHP...cc47f6392ca91bf10e8)

Safaricom shares to cost Sh5

Published on March 15, 2008, 12:00 am


By Kimathi Njoka

With as little as Sh10,000, Kenyans would acquire a stake in the region’s most profitable company, Safaricom Ltd.

Announcing what could be the region’s largest Initial Public Offer (IPO), Finance minister, Mr Amos Kimunya said the pricing was aimed at bringing on board as many investors as possible.

The IPO has been priced at Sh5 per share for a minimum of 2000 shares, translating to an investment of Sh10,000.

The Government is offloading a 25 per cent stake or 10 billion shares through the Nairobi Stock Exchange (NSE), an offer expected to net Sh50 billion in gross proceeds to finance development programmes.

If all goes as per the plan, the offer could net Sh15 billion more over the Sh35 billion he had targeted in his Budget speech for 2007/2008 financial year.

The offer is set to open on Friday March 28 and closes on April 23, with shares expected to commence trading at the NSE on June 9.

However, the finer details of the offer will be contained in the prospectus to be availed on March 28, when the offer opens to investors.

Kimunya said the offer had received goodwill from the two political principals President Kibaki and Prime minister- designate, Mr Raila Odinga.

The preparatory process for the IPO started mid-last year and was set for opening last December, but was held back by legal hurdles after then opposition ODM party, moved to court seeking to stop the process, arguing that a privatisation commission had not been put in place. It has since been constituted.

Yesterday, Kimunya said the offer has been divided into two pools, domestic and international.

Domestic investors have been allocated 65 per cent, while international investors will take the remaining 35 per cent.

But in case the domestic pool offer is oversubscribed by over 200 per cent, there is a provision to plough back 15 per cent from the international pool.

The international pool shall be open only to institutional investors and the price of this pool shall be determined through a book building process.

Although the process had been rooted during the KenGen IPO, but met resistance, this is the first time the process will be applied in the market and is expected to raise the bar of the Kenyan capital markets to align with the established best practices of international markets.

"Having a separate tool for the international investors is a big step for Kenya and will assist in putting us on the map as a financial hub in Africa. This will also open the opportunity for investors to learn about us and will help market the country, even as the Government considers the proposed issuing of a sovereign bond in raising $300 million," said Kimunya.

He said the involvement of an international investment bank, Morgan Stanley with a local investment bank, Dyer & Blair as transaction advisors gave a boost to the local capital markets.

"This will be helpful to our market in terms of capacity building, which will raise the knowledge and capability of our industry players,’’ he said.

With the announcement of the Offer calendar, kimunya called on investors to prepare themselves financially to participate in this landmark transaction.

Market analysts say the IPO will spur the market that has suffered greatly over the past eight weeks following the political impasse, with the index declining by 9.41 per cent.

The political crisis has also seen a rise in short term interest rates that had made the debt market more attractive.

Institutional investors and high net worth individuals, who seemed to have adopted a "wait and see" approach to the market are now seeking bargains.

Experts now see increased trading once the IPO is concluded.

"We envisage a situation where trading volumes post the IPO could increase by 200 to-300 per cent", NSE chief executive told The Standard recently.

I think 5 Bob is a good price for wanjiku and the 65% of the stock reserved for local investors is a good move. I hope they wont bring aboard that Qualified Institutional Investors thing on this one, otherwise mobitelea and his/her borthers might just pull a fast one on us.

quote:

Originally posted by kariúki wa kíhia:
I think 5 Bob is a good price for wanjiku and the 65% of the stock reserved for local investors is a good move. I hope they wont bring aboard that Qualified Institutional Investors thing on this one, otherwise mobitelea and his/her borthers might just pull a fast one on us.

Incidentally they are quite silent on that Qualified Institutional Investors thing. That will not be good for Wanjiku. They also say for local institutional investors, they may put in more stringent measures to vet them, including requirement of producing utility bills

Chances are; they will spare some chunk of the shares for qualified institutional investors. Of course this means reducing the number of sahares available for Wanjiku.

Where do the Kenyans in Diaspora fall? I would assume they are local investors since many of them will have CDS accounts. But if they are asking for utility bills to prove that they are local, what will those who leave out there provide?

quote:

Incidentally they are quite silent on that Qualified Institutional Investors thing. That will not be good for Wanjiku. They also say for local institutional investors, they may put in more stringent measures to vet them, including requirement of producing utility bills

Yes!!! there are guys who have formed some dummy companies for the sole purpose of participating in IPOs so they can be allocated more shares.

Given that this is going to be a mega IPO, the market cap will hit 1 trillion, and with previous experiences of delayed refund cheques, i think that the regulatory authorities or whichever body that is overseeing the IPO should recomend and make it mandatory that all refunds should be processed by EFTs as opposed to cheques. The issue of cheque endorsements should also be prohibited especially with the recent turn of events at Nyaga.

The companies are treated as individual investors for the purpose of share allocation. Only the recognized institutional investors such as fund managers, insurance companies etc are given special terms.

on the issue of utility bills, i think time may not allow. we are talking of over 1million CDS account holders and this will definately shoot up.The time allocated for this IPO is 19 working days and as we all know, majority of kenyans are so in love,or is it obsession?, with 'rush hour'.They will flock the brokerage houses at the last minute

And now you can apply for the shares online thru:
www.kenyaipos.co.ke

quote:

Originally posted by Ngûnjiri®:
And now you can apply for the shares online thru:
www.kenyaipos.co.ke

Great idea of submiting online applications. All one needs to do after completing the application is to make the payment: either at the receiving bank or with the broker.

i saw in the news last night that the IPO can now be applied online but this webpage www.kenyaipos.co.ke aint opening

quote:

Originally posted by kariúki wa kíhia:
i saw in the news last night that the IPO can now be applied online but this webpage www.kenyaipos.co.ke aint opening

Wa Kihia,
I was able to open it in the morning, where it required me to key in my ID no and my CDS Account to enter. I think it is down now. This will be lovely if we can apply for this and future IPOs online.

lets hope more IPOs come our way,lest the safcom dilutes other counters.

Mbugua
It is encouraging to hear that Cooperative Bank will roll out the IPO later this year

And rumors have it that Transcentury is also following suit

Here are some statistics on Safcom & the IPO
Turnover (Mar 2007) Ksh 48 B
Profit after tax (Mar 2007) 12 B
Divs (Mar 2007) Ksh 4 B
EPS 2007 0.3
DPS 2007 0.1
NAV per Share 0.825
Local offer opens 28th Mar 2008
International 9th Apr 2008
Closing 23rd Apr 2008
Commencement of trading Early June 08
Autorised shares Nos 119,999,999,600
Issued shares 40 B
No. on Offer 10 B
Offer price Ksh 5.00
NSE market Cap at offer Ksh 200 B
Value of Offer Sh 50 B
Post offer cap st.
GoK 35%
Vondafone K.Ltd 40%
New investors 25%

Allocation of new investors
Domestic retail(E.A) 33.8%
Domestic (Institutional) 27.3%
Safcom Dealers 1.3%
Employees 2.6%
International 35%
Domestic claw back threshold 15% further

it will be interesting to see the effect on the rates exch. & forex. I the capital market has come of age a whole world of opportunities.