Friday, March 28, 2008

it is today!

finally the official opening day for the purchase of safaricom shares has arrived. its a great day and the insert in the dailies has captured it very appropriately.

'We are oppening our doors to new owners ... YOU'

of course safaricom has always been good at adverts. very appropriate, emotional and captivating. indeed now the time has come for every kenyan to own a piece of the most profitable and respected firm in east and central africa. and may be soon in africa. Safaricom is a great going concern, and the profits have been good. And i have been encouraging everyone to take a piece of this pearl.

The only fear is that the shares on offer are too many and they may be an overwhelming supply once they start trading since the retail investors have just about 3.5 billion shares at their disposal. that translates to 17.5 billion shillings. i hope it wont be too much.

however sadly some quarters are still arguing about the owners of mobitelea who own part of vodafon kenya. for me i find this to be an argument whose strength is the same same as that of the shadow of a cockrel who had been starved to death. (or something like that to copy my friend argwings kodhek) its a real lame argument really. since in the first place these guys arent asking the owners of vodafone kenya or even vodafone UK. and again, am aware that its the Govt or Kenya that is selling their shareholding in safaricom and not mobitelea or vodafone Kenya. so its really a non issue to me. Further, am focused on the prize, i cant wait for the situation to be perfect before i plunge. the world belongs to risk takers and not people who are puritan!

the sad part is that ODM may have convinced most of their supports to avoid the IPO. what will happen is that one year down the line, safaricom will be majority owned by investors from PNU region (here read as Kikuyu) and these same guys will come out and say that Kikuyus own everything. just the same way they sold their farms to those investors only to turn years later and cry foul ( ok in some cases coz we also know of unfair allocation of land to some guys from central)

But seriously, this year is a year of great decision making. its upon you as an individual to decide. Does the argument put forward by Ruto, Nyongo and the like convince you? are you going to stop buying this share from GOK just because you dont know who the other owners are? and when you normally buy shares at the NSE, do you normally insist on knowing the others million shareholders before placing a bid?



  1. let's get it started.

    Ruto, Nyongo ahave a point, but they fail to see the bigger picture. Most retail shareholders are from one region/community and these MP's have to start educating their constituents on other channels of wealth creation.

  2. Thanks OD. Its my hope that I'll get full allocation of what I'm going to apply for. As someone said in stockkenya forum, Safaricom is not Eveready.

  3. Of course the Mobitelea issue is not clean, and we should raise our voices about such shoddy deals if Kenya is to rise from the shackles of corruption. The stand by ODM is admirable, but having lost the legal battle in court, they need a better strategy than mass action and other threats.

    None the less, I will buy. I've realized I don't know the major shareholders of the other companies I have stocks in or how they got their shareholding.

  4. @banks, you have said it.

    @annon, I have a feeling people will get good allocations this time

    @mwasjd, the issue of mobitelea can be debated for ages. but i think the better focus is your own personal returns

  5. "and when you normally buy shares at the NSE, do you normally insist on knowing the others million shareholders before placing a bid?"

    What a good way to put it!

  6. It’s all about social democracy. ODM manifesto preached state ownership and private-public-partnerships as means of distributing capital (what they call National Resources). Nyongo’s latest book, “A Pathway to Development” details how Singapore and Malaysia became rich through proper management of state corporations; funds from these institutions were used to provide safety-nets in social security, housing and education.

    In that sense, Prof Nyong’o, ODM’s chief economist albeit his Political Science PhD, would prefer to utilize Safcom’s Kshs17B profits in poverty programs, not in one-million-shareholders' pockets. Same mentality applies to shares allocation: our social democrats (and this is just a guess) would prefer to have regions (constituencies) or interest groups (women and youth) receive certain percentages. After all, Safcom is a national cake that should be shared equally, not according to ones ability.

    See Kenyanomics' Problem with ODM Economics.

  7. I am no expert in financial ( and especially IPO) matters, but here are my thoughts about the fears/falsehoods of the Safaricom IPO.

    (i) Why are they selling it so low or is that the worth?

    They ( them ) want to buy it cheap. And they want you to support it, so they let you also eat a little. Say you get your 2,000 shares. You own (0.0000565% of the 25% of safaricom). Each of them get their 100m shares. One of the them now own 2.85% of 25% of safaricom. He has 10,000X more than you. Based on this transaction alone, his life is gonna be improved 10000X yours! If the shares were at Ksh 30, he would not buy as much.

    (ii) Will i make a kill?

    They do not care whether you do or do not, as long as you think you will, they are happy. They are waiting to snap up what you are willing to sell. Now, if you sell at Ksh 30 ( look my shares increased made 600% !), they buy them all at $0.5 a share. That my dear, is still a bargain for a profitable modern phone company. Now he has 200m more shares. He owns 9% of 25% of safaricom.

    (iii) The shares will drop below Ksh 5 after listing.

    Not likely, surely Ksh 5 is low enough. But if they did, much much better for them. As (ii) suggested, they are waiting to snap them up, so, that is the best thing that could happen to them. If the shares drop to Ksh 2.5, you may start thinking, well, let me let them go before it gets worse, and rush to sell. Your loss. Wise investors buy when the people are panic selling.

    (iv) I do not know who owns Mobitelea, so i suspect the deal.

    Odegle Nyang coudl not have said it better:

    are you going to stop buying this share from GOK just because you dont know who the other owners are? and when you normally buy shares at the NSE, do you normally insist on knowing the others million shareholders before placing a bid?

    Same question: Are you in the US? Do you own mutual funds? Do you know who else owns the same funds? Do you know that some of the investors brought money from dubious ( drug, blood diamonds, etc) gains? Do you own KenGen or EABL or Unga? So does Pattni, Somaia, Biwott, Moi, Kabuga.

    (iv) Why allow foreigners to buy public property so cheaply?

    Let us assume safaricom is as valuable as they say. Why allow foreigners to compete with Kenyans at such a low price? We all know, the best way to kill 2 these two birds with one stone, is to sell to the retail kenyan public as much shares as they need, and let the foreigners buy it from the public after listing. Then you are assured of post IPO price increase ( and mwananchi gains) and Kenya gets $$$$ from the outsiders. OK, what did we say? These foreigners are them! That is why they are allocated a huge portion. [ Who knows, perhaps, when the foreigners are ready to send their chapa to pay, the $ may strengthen vs the Ksh. Keep watching ]

    (v) I have principles, this deal is not clean!

    The duly elected GOK were adamant in selling this public company ( including your portion, despite your protest) and they have. Perhaps you can still protest by buying and keeping your share of the company, and using your proceeds to do a good cause. Remember, the company was paid for by you. If "thieves" ( Mobitelea Ventures Ltd, Vodafone, they ) steal from you, and they offered to return a micro portion of what they stole, would you reject it?

    (vi) How can i protest this?

    The best way would have been to protest at Safaricom by public mass action whereby we all say, "we are not using safaricom unil Jopseph tells us who Mobitelea is and Kimunya makes everything transparent". But, we are Kenyans, we are ignorant that we posses such powers, and we plain do not just care, as long as we make a few Shillings killing.

    But, you can still protest, modestly. If you believe the foregoing arguments, then the best way is to buy the shares and dig in for as long as it takes. By doing so, you will deny them the chance to grab more of this property cheaply. OK, look at it that the money you put in (10K, or 50K) was lost. But then again, no gain without risks.

    (Vii) Bottom line, this is the new open Land Grabbing

    So, you see my Friend, this is the new Land Grabbing. Moi and his boys used crude methods ( though they wisened up towards the end- Mobitelea etc). Their MOD was: all for me, nothing for you. But these new boys ( Kimunya, Stanley, Jimna, Jimmy, John ) they are smart. They do it openly, and with your blessing. 200,000,000 for me, 2,000 for you. And, because we are all greedy ( and are Land Grabbers at heart ), we bite.

    (viii) My call: a buy

    So, i will write off 200K, put aside 20K for the IPO, and 180K to wait for the villager to to sell his. If i lose my 200K, at least i will have help inject $3K into the KE economy.

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