Investors who participated in the just-concluded Kenya Re initial public offering (IPO) were yesterday looking forward to getting fewer shares than they applied for after it emerged that the offer had been oversubscribed by more than four times.
By yesterday afternoon, the tallies showed that the offer had attracted more than Sh10 billion against a target of Sh2.3 billion. More than 134, 000 applications had been processed, according to Eunice Mbogo, the company's managing director.
This level of investor interest translates to an oversubscription of 334 per cent, a clear signal that Kenya Re is not about to break the tradition of oversubscription that has characterised past IPOs since the Kenya Electricity Generating Company (KenGen) came into the market in May last year.
Treasury is ceding its 40 per cent stake or 240 million shares to the public in an offer that kicked off on July 18.
Ms Mbogo said the proceeds of the offer are set to climb further as the transaction teams were last evening still tallying the applications, following a last minute rush by insurance firms. Treasury's decision to allow insurance firms to hold off payments until the application process is completed triggered the rush.
"The prospects are very good and with counting still going on we are expecting a massive oversubscription," said an elated Ms Mbogo.
Though it was difficult to verify the interest of retail investors on the issue, stockbrokers noted that the uptake of the shares by the retail investors was sluggish compared to their performance in past IPO's, including KenGen, Scangroup and Eveready.
"Retail investors will oversubscribe their share of the offer by a minimal fraction as many opted for the minimum shares," said Chris Munene, chief dealer at Bob Mathews brokerage firm.
Details from Kenya Re indicated that its employees have also oversubscribed their share by a slight fraction.
This is a pointer that the other two categories including insurance firms and investors dubbed Qualified Institutional Investors (QII) including pension funds, fund managers and investment advisory firms have grossly oversubscribed their portion of their shares.
But with both category of investors allowed insurance firms to hold off payments until the application process is completed, the transaction team will be saved the headache of processing refunds that would have been in excess of Sh8 billion.
Retail investors will get a minimum lot of 2,000 shares while the high net investors including insurance firms and pension funds, fund managers and investment advisory firms will have a minimum of 100, 000 shares.
With all categories oversubscribed, the investors will get their minimum shares and there after they will be allocated 100 shares in a pro rata basis.
The retail investors will take 47 per cent of the shares on offer, nearly half the 97 per cent shares they snapped up during the KenGen IPO in April last year.