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Kenya: Excitement As Safaricom IPO Closes
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The East African Standard (Nairobi)
24 April 2008
Posted to the web 23 April 2008
James Anyanzwa and Reuters
Nairobi
Just hours before the region's biggest IPO closed, Kenyans -including many who lost everything in post-election violence - thronged brokerage houses to buy Safaricom shares.
The Government is selling a 25 per cent stake in the mobile phone operator, one of the country's most profitable firms, and expects proceeds of at least Sh50 billion ($812 million).
The Government is selling slightly less than half of its holding in Safaricom after which it will remain with 35 per cent of the company. The other 65 per cent will be held by Vodafone Kenya, a subsidiary of UK's Vodafone Plc (40 per cent) and the public 25 per cent.
The IPO has set prices at the Nairobi Stock Exchange tumbling as investors assemble funds to gain ownership. The sale took place for at least three weeks and will be expected to be June 9.
The offer is seen as an important gauge of investor confidence in the country after President Mwai Kibaki's disputed December re-election triggered ethnic clashes that killed at least 1,200 people and left 350,000 homeless.
"I never thought that I would invest in anything after seeing my life savings reduced to ashes in a matter of minutes," said Mr James Waiganjo, 68, whose house was burnt by marauding gangs who also killed his son in the violence.
At a price of five shillings each for the 10 billion shares offered, the firm's minimum market value will hit $3.3 billion.
Foreign investors will pay a slight premium for the company in which Britain's Vodafone holds a 40 per cent stake.
Now living in a tent in a football stadium, Waiganjo sold his plot of land at a throwaway price to raise the minimum Sh10,000 ($162) to take part in the offer, which analysts expect, be oversubscribed by about 200 percent.
Most small investors, like Waijango, hope Safaricom's share price will soar when the company lists in June, as has happened with other major floatation in Kenya.
Investment experts have advised against a rushed sale of shares once it's listed on the bourse. They warn that such a move would drive the NSE indices down, while the sellers could end up making huge losses.
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But analysts say Safaricom's debut is not expected to reach the heights of past issues such as utility KenGen whose price quadrupled on the first day of trade in May 2006.
"Doubling in share price means the value goes from $3.3 billion to $6.6 billion, that is too rich a valuation. We are going to get 50-60 per cent (increase in price)," said Aly-Khan Satchu, a Nairobi stock analyst and former investment banker.
Domestic workers, security guards and students are among those queuing with businessmen for Safaricom stock. And many retail investors, especially those who have borrowed to buy the low-priced IPO shares, will sell them quickly, analysts say.
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