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Kenya: Safaricom IPO Launched Amid Fear
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The East African Standard (Nairobi)
28 March 2008
Posted to the web 28 March 2008
David Ohito
Nairobi
President Kibaki's and ODM leader, Mr Raila Odinga's newfound friendship will be tested on Friday as the biggest-ever share IPO in Kenya and the region begins.
The President will be at KICC Nairobi at 8am to launch the Sh50 billion-share sale of Safaricom, 25 per cent of the 60 per cent stake the Government owns in the mobile telephone company.
Ten billion shares will be offered to the public, 6.5 billion to local investors and 3.5 billion to foreigners.
But Raila and his party, ODM, have opposed the sale and called for a delay to iron out issues over alleged shadowy Mobitelea company that owns shares in Vodafone Kenya, a co-shareholder with the Government in Safaricom.
Raila himself has said ghost owners of Mobitelea were out to enrich themselves using poor people's investments.
"The sale should be put off until a coalition Cabinet is in place to discuss the matter," said Raila.
However, Finance minister, Mr Amos Kimunya, has said the claims were unfounded and misplaced. He said he had spoken to Raila earlier and he had endorsed the IPO.
"The reservations over the IPO are not valid. I spoke to Raila and he endorsed the IPO," the minister said on Wednesday.
Kimunya added: "Raila recognises the implications of his statement on the IPO."
The minister said Kenyans had been saving to buy the shares and it was fair that they get a chance to fulfil their dreams.
"The issue of Mobitelea will not delay the IPO since the Government is only offloading part of its 60 per cent shares," he said.
On Thursday, tension heightened when ODM threatened to call mass action outside KICC, the venue of the IPO launch.
The party parliamentary group cited last year's Public Investments Committee report, saying it showed that Vodafone acquired 30 per cent of Safaricom from Telkom Kenya on January 25, 1999.
ODM officials, Mr Jakoyo Midiwo (Chief Whip), Mr Omingo Magara (treasurer) and Mr Ababu Namwamba (Parliamentary Group secretary), said the PIC report indicated that the Telkom board granted another 10 per cent shares to Vodafone without approval from the Treasury.
"Concerted efforts that Kenyans be told who owns Mobitelea have fallen on deaf ears, strengthening fears of another historic grand rip-off scheme by politically connected individuals," Magara said.
The MPs also questioned the arbitrary increase of shares available to foreign investors from the initial 25 per cent to 35 per cent.
"This will deny Kenyans the opportunity to own a good share of the company they have painstakingly built from scratch and instead reward shadowy profiteers," Magara said.
The MPs demanded a guarantee that Kenyans would not be short-changed.
Party Secretary-General, Prof Anyang' Nyong'o, sent a statement to newsrooms warning the public and investors, local and foreign, that procedures, including the Privatisation Act 2005, were flouted.
Nyong'o claimed that compliance required by the Capital Markets Authority Act and NSE rules had been ignored and the public and investors would engage in a risky investment.
But amid the controversy, not everybody is opposed to the sale of the mobile phone company shares. More than 20 NGOs yesterday told ODM leaders to stop politicising the IPO.
Led by their spokesperson, Ms Daisy Amdany, the NGOs called on Kenyans to ignore the politicians and turn up in large numbers to participate in the unveiling of the IPO.
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The group, Kenyans without Borders, said wananchi spend millions of shillings making calls through Safaricom and should thus own the company.
"Politicians should stop misleading Kenyans. We urge retail investors to buy the shares and share in the Safaricom cake," said Amdany.
Issues have also been raised over alleged conflict of interest. ODM MPs said NSE chairman, Mr Jimnah Mbaru, wore several hats - he owns Dyer and Blair Investment Bank, which is an advisor in the IPO, while his Dyer and Blair stockbrokerage is bidding for shares.
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