Justus Ondari
15 March 2008
Nairobi — Kenyans will have a chance to invest in the eagerly awaited Safaricom at a cost of only Sh5 per share when the Initial Public Offer starts in two weeks' time.
Finance minister Amos Kimunya announced the floatation of shares to begin on March 28 in which the Government intends to raise Sh50 billion.
Prospective buyers will need a minimum of Sh10,000 to participate in the IPO.
In a programme released on Friday by Mr Kimunya, the 10 billion shares the Government is offering will cost Sh5 per share, with 2,000 shares being the minimum application. The price is discounted by 14.7 per cent.
"Out of this transaction, the Government will raise approximately Sh50 billion in gross proceedings to finance development programmes," Mr Kimunya told a press conference at a Nairobi hotel.
Prospectus for the IPO will be issued the same day it opens.
The IPO set to close on April 23, 2008, will see the shares of East Africa's most profitable company starting to trade at the Nairobi Stock Exchange (NSE) on June 9, 2008.
The offer shall be divided into two pools - domestic and international - with 65 per cent going to domestic investors and the rest to foreign investors.
Under the offer, however, if the domestic pool is oversubscribed by 200 per cent, there is a clause that allows for a claw-back of the foreign shares up to 15 per cent.
While the share offer price for local investors - who include investors in the East African Community countries of Uganda, Tanzania, Rwanda and Burundi - was determined by the transaction advisers, the foreign pool will be open to institutional investors only and their share price offer will be determined through a kind of auction, otherwise known as book building process.
The 10 billion shares Treasury will be off-loading amounts to 25 per cent of its 60 per cent stake in Safaricom -which Vodafone Plc holds 40 per cent.
Originally, the shares were held by Telkom Kenya but a restructuring process that preceded after the Government's sale of the parastatal to France Telecom last year at a cost of Sh26 billion saw the stake transferred to the Treasury.
During the Press conference, Mr Kimunya clarified the Capital Markets Authority, NSE and the Central Depository and Settlement Corporation had put in place mechanisms that would enable investors in the troubled Nyaga Stockbrokers take part in the IPO.
And in line with the recently signed accord between the Government and the Orange Democratic Movement (ODM), Mr Kimunya said he had already briefed President Kibaki and ODM leader Raila Odinga on the IPO.
It is a clear break from the period preceding December 27 General Election when ODM sought to stop the sale by going to court until after the Privatisation Act - passed two years ago but which Mr Kimunya had not allowed to take effect through a Kenya Gazette notice. Later, however, the minister implemented the Act and the ODM suit was dismissed.
The sale of Safaricom, which made Sh17.1 billion profit last year to become the region's most profitable company, is critical to the Government's efforts to raise funds for infrastructural reconstruction following the post-election violence and sealing its Budget deficit for the current financial year. It is estimated that the Treasury has a Sh109.8 billion deficit.
With less than 140,000 subscribers six years ago, Safaricom which is valued at Sh200 billion has seen its subscriber base increase to 10 billion.
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