East African Business Week (Kampala)
David Mugabe
14 April 2008
Kampala — Safaricom's initial public offer (IPO) is passively ripping the counters at the local Uganda Securities Exchange while courting huge interests from Ugandans in the run down to the stipulated three weeks share offer.
In comparison to all other Kenyan IPOs that locals here applied for, brokers and financial experts say Safaricom is emerging as the biggest and with it causing a relative destabilsation of the local bourse.
"People have the highest expectations like it was with KENGEN. It has been the greatest opportunity for Ugandans to realize the advantage of diversifying their portfolios by investing in Kenya and the opportunities brought in by bigger markets like Kenya with over 50 companies listed. It is positive that many banks have come in to support the transaction," said Ms. Vivian Sekadde, a broker at African Alliance, a top brokerage firm and fund manager in Uganda.
Another brokerage firm noted that in the Stanbic Bank IPO, they had been able to attract 1000 subscribers in the three weeks offer. Yet by the end of the first week of the Safaricom IPO, their firm had attracted close to 900 clients for the Safaricom IPO.
"In the first week, there was a lot of traffic. This second week, traffic has dropped. All in all, it's a clear indication of investor confidence in East Africa"s capital markets," said Sekadde.
Sector experts concede that Safaricom has shown that clearly, there is cash in the market for willing investors to snap up.
Mr. Njoroge Nganga, Dyer and Blair Uganda General Manager says local response to the Safaricom IPO is incredible. Njoroge says there are not only long time investors but also first time investors. "It's been very good," said Njoroge.
Safaricom has also brought in a downside to the business at Uganda Securities Exchange. Most counters have stalled with Stanbic Bank Uganda (SBU) realizing a fall in price because Kenyan investors have reportedly sold out their stakes to generate money to invest in Safaricom. It now appears the move by Kenyan investors is a blessing to potential Ugandan investors who now get a chance to buy into SBU at a relatively cheap price of $0.14 (Ush235) by end of last week after rising to $0.15 (Ush255) a few weeks earlier.
At the New Vision Limited, there are no shares available for trading while Bank of Baroda Uganda is picking up in price again ahead of the announcement of its financial statement in mid year. At the British American Tobacco Uganda (BATU) counter, there are hardly any buyers although there are sell offers.
Safaricom has not come without its shortfalls. Brokerage firms have had to battle with the documentation challenges. Kenyans have a national identity card while Ugandans lack this comprehensive and cheap document.
Be the first to Write a Comment!
Copyright © 2008 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
