11 May 2008
editorial
Thanks so much for your help, foreign investors! That is what Kenyans are thinking after it emerged foreigners will scoop the Safaricom shares for Sh5.50, after a much-hyped book building.
The process is an auction of sorts supposed to get the best deal for Treasury and differentiate 'domestic pool' from the 'foreign pool'.
After intensive and expensive road shows abroad, the premium emerged as Sh0.50 above the domestic price. In the meanwhile, the promoters of the issue announced Kenyans threw Sh115 billion at the issue - Sh65 billion above the Sh50 billion required to buy the 25 per cent of the largely taxpayer-funded asset.
The objectives of the IPO were twofold: one, to empower Kenyans by spreading Safaricom ownership, and two, filling State coffers.
Whereas the second has been achieved, to a large extent the first one is in abeyance as Kenyans will get roughly a third of what they applied for.
And that would come after billions in public cash has been tied up in the issue; resulting in a severe credit squeeze for retail and commercial borrowers and in the inter-bank market.
WE BELIEVE THAT IN THE INTEREST of Kenya taxpayers, the following should happen:
One, the sale to the foreign investors should be reviewed in future, and, at present if legally possible, halted. The domestic demand clearly shows that it made no sense to include foreigners with their infinitesimal impact on price.
Two, a full disclosure of the foreign institutions and their ultimate beneficiaries should be made.
Thirdly, fully conscious of the winding process that is privatisation, we ask the Government to speed up the sale of more shares in Safaricom and other parastatals including Kenya Pipeline Company.
But the bottom line is that foreigners should only buy public assets in case of verifiable financial/human resource gap.
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