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Kenya: Safaricom Sale Still On Track, Says Treasury
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The East African Standard (Nairobi)
27 March 2008
Posted to the web 26 March 2008
James Anyanzwa
Nairobi
The Government has maintained that the sale of its 25 per cent stake in Safaricom to the public will proceed despite protests over the firm's ownership structure.
Investment Secretary, Ms Esther Koimett, on Wednesday said the new Privatisation Act exempts ongoing Government privatisation from certain conditions, notably a requirement that seeks not to reverse ongoing divestitures that is detrimental to any party concerned.
"I think it is fair to say that the transaction will proceed. We are scheduled to launch the offer on Friday morning," Koimett told a press briefing at Citi Bank offices in Nairobi on Wednesday.
The remarks, however, puts the Government into a collision path with the ODM party, which for the second time, has come out strongly opposing the sale of Safaricom shares to the public on grounds that the Government has flouted the Privatisation Act.
Party Secretary General, Prof Anyang' Nyong'o, also demanded on Tuesday that the identity of Mobitelea that owns five per cent in the country's most profitable company be established before the IPO starts tomorrow.
"The privatisation of Safaricom must be in conformity with the provisions of the Privatisation Act," said Nyong'o adding "The Government has side stepped the crucial requirement, leading to several omissions in the process of the grand sale."
It is understood that the Privatisation Act requires parliamentary approval of any disposal of public asset and has set up a commission, which sets standards to protect public interest.
Koimett, however, said that the Safaricom IPO is a transaction whose timing is long overdue and has in fact received Cabinet approval in various stages of its development.
"It has taken a long time and we don't really see it as having been rushed," she explained.
But Nyong'o accuses Finance minister, Mr Amos Kimunya, of failing to prepare and submit a Privatisation Strategy to Parliament for debate as required under the Act.
Mobitela haunts deal
"If this had been brought to the floor of the House, Kenyans would have known the faces behind the mysterious Mobitelea. This poses the danger that the ghost owners will now be unjustly enriched. The Parliamentary Investment Committee has the powers to demand the identity of Mobitelea owners," he said.
The Safaricom IPO will see 10 billion shares, representing 25 per cent equity in the mobile service provider offered to the market in the largest ever flotation in East Africa.
The lead transaction advisor Morgan Stanley priced the shares at Sh5 (US cents 7.5), putting its total value at Sh200 billion ($3 billion).
But the sale comes at a time when the local financial market is in turmoil following the collapse of two financial intermediaries - Francis Thuo &Partners and Nyaga Stock Brokers. The brokers were found to be financially distressed and irregularly trading in clients' shares. News of other brokers in a similar condition has also sparked jittery in the financial market.
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The Government hopes to generate Sh50 billion ($760 million) in gross proceeds from the sale, which will close on Wednesay, April 23, after a period of 26 calendar days.
The IPO was originally planned for December 2007 but was delayed following squabbles and court cases in the run up to last year's disputed presidential vote.
The outbreak of violence that killed 1,000 and displaced more than 350,000 also made it impossible to conduct the sale in January.
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