Kenya Re IPO II: The Numbers, QII's & The "Shoe Shiners"

Finally the Capital Market Authority has approved the long awaited Kenya Re IPO. Kimunya announced this yesterday and here are some of the numbers:

Total value of Kenya Re: Ksh.5.7 Billion

Value of the firm on offer: Ksh.2.3 Billion {40% of Kenya Re}

Number of shares on offer: 240 million shares

Price per share: Ksh.9.50

Offer dates: July 18 - 31, 2007.

Share allocation to "different" investors:

• Insurance companies - 20%


• Qualified Institutional Investor (QII) - 30% {who the hell are these guys?}


• Kenya Re employees - 3%


• shoe shiners {you and me} - 47%

Minimum numbers of share per subscriber:
Employees and Directors
Minimum Application Size - 2,000
Thereafter in multiples of - 1,000

Insurance Companies
Minimum Application Size - 100,000
Thereafter in multiples of - 10,000

Qualified Institutional Investors (QII)
Minimum Application Size - 100,000
Thereafter in multiples of - 10,000

Retail (Corporate and shoe shiners)
Minimum Application Size - 2,000
Thereafter in multiples of - 1,000

Note:

Prospectuses and Application forms will be available from July 18, 2007 {watch this space for a complete break down and analysis} you can also see a report on them here.

I'm told Qualified Institutional Investors (QII) are defined as a company whose ordinary course of business is to hold, manage or invest funds in connection with retirement benefits, insurance contracts, mortgage and saving schemes and any fund or scheme in the nature of a collective investment scheme or a unit trust. {in simple words they are the deal makers, the lead we follow}

QII will, for the first time in kenyan history, use the Delivery vs Payment where they shall only pay for the confirmed allocated shares (no upfront payment and chasing after refund cheques} For more storie on this check here, here and here.

Merger: CFC-Stanbic bank

Finaly thing are on the way to finalising the Stanbic/CFC banks merger. Stanbic Bank - the kenyan branch for the internationally known Standard Bank of South Africa will be acquiring 60% of CFC bank. below are come merger statistics:

Asset base
Stanbic - Ksh.25 Billion
CFC - Ksh. 40 Billion

Shareholders Fund {As at 31/12/2006}
Stanbic - Ksh.2.7 Billion
CFC - Ksh. 4.7 Billion

Shareholders transfer to Stanbic Bank from CFC
113,341,663 shares
Plus: 50,868,846 ex-listed units from Gambit
Total: 164,210,527 shares which is 60% of CFC

Exemption by CMA
CMA will exempt them from regulation 4, governing take overs and mergers, that requires that a firm making a take over bid for a public listed firm to give the option to sell to all shareholders at the same price (including minority ones like you and me)

Marion Jones Is Broke?!*#

How the hell do this African-Americans get broke so quickly? first it was Micheal Jackson, then Mike Tyson and now Marion Jones. Somebody needs to impact some financial management ideas into their thick heads! I'm i the only oe who has heard of saving and investing, or what? for more on this read here.

Equity Bank: Setting the pace

Equity bank is on the run this year. it seems like everything good is happenig there. After hitting the Ksh.1.1 billion profit mark in february this year, they have goen forth to make some very strtegic moves that will make them one of the biggest players in the Financial sector.

First, they want to acquire HFCK, a move that will see them opening a mortgage branch. HFCK being a very well known firm you can imagine the amount of good will Equity will be swimming in.

They are now moving into the international money tranfer business. In collaboration with international financial institution, the bank plans to build an extensive global network that will help kenyans in the Diaspora remmitte money back home for both domestic use and investment. {check here for more on this}

And on a higher note, they are planning to open 3 women only branches across kenya. This according the bank's CEO, James Mwangi will help more women access to loans and other banking services. Taking into account that the Youth Development Fund was dibursed through them too.

Their CEO was also invited to the G-8 summit for the effort of the bank to enhance microfinance services in Kenya.

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My 2007 half year Green list

{Green list - this is a personal list of my prefered stocks in the market. It does not indicate certainity}

They say the grass is greener on the other side of the fence. Thats why everyone is looking at the IPO's; which seemingly are just disappointing them. Especially the retail investors like me. Short term nvestors ... aha! I sat back and watched them being massacred in the Access Kenya IPO and now they are waiting patiently for Kenya Re and Safaricom IPOs. Of which they will still be sidelined. So the earlier we learn the better. Thats why i've come up with my small list of the most profiatable counters:

1. East African Cables

After their split last year the share has been rather stagnant and was minimaly affected by the market correction of early this year. At the moment it has picked up and the management is restructuring to ensure profitability. they are already moving into new offices and have emberked on a thorough advertising scheme.

2. Access Kenya

After their IPO the price has stagnated between 12 and 13. most of the retail guys who got this shares are disposing and collecting their refund checks in disgust. and this is where the opportunity present it self. with this guys disposing off in mass the supply is too high making the prices to be lower than the intrisinc value. so once this guys have disposed and the prices move back to it true value which is higher than the current price, there will no turning back. it hit 20 before you can say AK.

3. KCB

This is the biggest bank in kenya in terms of number of branches and they are still expanding in other parts of East Africa. After the share split of 10:1 in march the shares have not been trading in the market until today. when they hit the market floor i believe they will be headed downwards and this presents a clear way for you to buy. anything below 20 is a sure buy. with the rentrenchment and management change the profitabiltity is also still looking good in the medium term. so i will also have this in my green list.

4. Equity Bank

this is the best perfoming stock in the market this year and things are still looking good. they are about to Acquire Housing Finance. the sooner you get on this train the better.

safaricom: taking the lead

Safaricom has done it again! After posting a Ksh.12 billion gross profit last year, they have increased their profitability by a whooping 40% to Ksh.17 billion this year. This is the largest amount ever in profits to be made by an East African company. You can imagine what this has done to investors appetite for it coming IPO,considering that during the budget Kimunya assured Kenyans that it will be coming before the end of the year. I'm counting. The big question is: ARE MOBILE COMPANIES OVERCHARGING THEIR CUSTOMERS? this is a question to be answered later. For more informatin on Safaricom's success story look here, here and here.

EAC: mix & match budgets

Yesterday the three east African countries read their budget together as a sign of solidarity. Below is just a brief analysis of what the three finance ministers talked about:

Kenya: By Hon. Amos Kimunya

• Ksh2.9 billion for secondary tuition
• Ksh1.3 billion for resettlement of internal refugees
• Bursaries-Ksh800 million
• Nairobi hawkers’ market building-Ksh400 millionExempt from tax
• Medical equipment ordered by hospitals
• Pensioner’s monthly receipts have also been exempted from income tax
• 20% duty slapped on imported used spare parts
• Duty on drinks up
• Excise duty on certain types of spirits, malt beer, mineral water and cigarettes were promptly increased to pay for the increased social spending.
• Licenses: Some 205 licenseas are to be scrapped, while a further 371 will be simplified.
• A Counterfeit Bill to be tabled in Parliament to rein in runaway trade in sub-standard goods.
• Sugar: Manufacturers who use imported industrial sugar will not pay a Sugar Development Levy on this product, which is used in making several fast moving consumer goods.
• Plastic bags: A 20 per cent excise duty has been slapped on plastic bags. Certain categories of the product at supermarket tills have been banned altogether.
• Goods and services to investors in low-cost housing for the urban poor will be zero-rated as long as more than 20 units are to be built.
• Other highlights: Ugandans and Tanzanians will enjoy the same rights enjoyed by Kenyans when investing on the Nairobi Stock Exchange. These will include the same number of shares and taxation.
  
  Tanzania:
• Education (18.0 percent), Roads (12.8 percent), Health (10 percent), Agriculture (6.2 percent) and Water (5.1 percent).
• VAT: Fire extinguishers, locally processed yarn, diapers, urine and hygienic bags for medical use exempt from VAT
• Excise: Tanzania has removed the marking requirement “FOR EXPORT ONLY” on exported excisable products. The requirement was been found to interfere with the country’s export drive.Excise duty on drinks up
• Excise duties on drinks shot up by 7 percent. The cost of Carbonated soft drinks have gone up from Tshillings 45 per litre to Tsh48 per litre.
• Beer made from local un-malted cereals is up from Tsh161 per litre to Tsh173 per litre. Other beers have shot from TSh274 per litre to Tsh294 per litre.
• Wine produced with more than 25 percent imported grapes is up from TSh 878 per litre to TSh 940 per litre; and Spirits, from TSh 1,302 per litre to TSh 1,394 per litre.Petroleum products prices up
• Motor Spirit Regular (MSR) and Premium (MSP), from shillings 315 per litre to shillings 337 per litre.
• Gas Oil (GO), from shillings 292 per litre to shillings 312 per litre; Illuminating Kerosene, from shillings 52 per litre to shillings 56 per litre; Heavy Furnace Oil (HFO), from shillings 109 per litre to shillings 117 per litre; and Industrial Diesel Oil (IDO), from shillings 366 per litre to shillings 392 per litre.
• Road and Fuel levy up : Fuel levy paid by road users has been increased from TSh 100 per litre to TSh 200 per litre of petrol and diesel.
• Motor vehicle licence fee up: Annual motor vehicle license fee has been amended from the current flat rate of shillings 20,000 per motor vehicle to a three-tier structure based on engine capacity. Motor vehicles with engine capacity not exceeding 1500cc will pay Tshillings 80,000 per annum.
• Engine capacity exceeding 1500cc but not exceeding 5000cc will be charged Tshillings 230,000 per annum; and engine capacity exceeding 5000 cc, will be charged Tshillings 100, 000 per annum.
• EAC : In line with the EAC with the common external tariff rates, Tanzania has reduced and exempted import duties on various items ranging from medical equipment, solar, raw materials and communication equipment.
  
  Uganda
• Road licence fees abolished -
• VAT on sale of residential houses down - International Airlines exempted from tax on income -
• Excise duty on diesel and petrol up -
• New local govt tax on wealth & incomes -
• 10% tax on used car spareparts -
• Soldiers & civil servants salaries up -
• Visa fees up to $50 -
• New tax on hotel room occupants -
• Loans for the poor to buy land -
• Tax holiday for industrial exporters -
• Amnesty for tax defaulters -
• Sh280b set for pension arrears -
• Airtime, drinks & mivumba unchanged

Kenya Re. IPO: Lest We Forget

Kenya Re will be announcing an IPO very soon. Sooner than even next week. But the big question is WILL IT BE A GOOD BUY OR NOT? This most probably will depend on the pricing. I believe they will be pricing it less than Ksh.10 per share. The Access Kenya allocation style will also be followed here too, with the retail investors get very little after the IPO. Already D&B stock brokers have taken the deal and following what they did with KenGen I believe Kenya Re too will be a sure oversubscription. Lest we forget the corruption allegation levied on its top management late last year. Check here for more details on how Kenya-Re CEOs squirreled away funds.

I have also been reading the best rating they got from the A.M. Best Company rating report. It says that 'in their opinion' Kenya Re has a B+ {very good} for the 2005 - 2006. On this they say Re has a solid and very good operating perfomance over this period. They also believe that the forth coming privatisation will be a challenge to the management team. Much more on the financial statements have been discussed. You can check it here.

Is Someone Hacking into Kenyan Websites?

First it was Business Daily with all the stories of sijui web hosting. Now the Safaricom website is permanently down for days now and while I was still wondering why they don’t have a back up hot site, someone hits the Jackpot and hacks into Equity bank's website and online accounts, exposing clients to so much risk. I’m the most risk averse person I know (if not plain paranoid) and I have had to stop anything involving internet n money. From M-pesa to mobile banking, even checking electricity bills via the phone is on hold now. Until I’m assured that some thing has been done to keep out this hacker from my money. I have heard stories of guys loosing whole or nearly whole of their earthly belongings to internet hackers n I’m not taking any chances. Are you?

Bad Weekend for Kenyan Sports men

Harambee Stars: As much as I would like to ignore our local boys, their dismal performance can’t stop me from saying we are pathetic in soccer n nothing less than a radical surgery will help this country. While they celebrated a one nil loss to Nigeria who, by the way, went to Uganda and were hammered two – one, they went forward and nearly lost to Swaziland. Then I sit there watching Sadiq Shaban on KTN blaming the ref. What a shame!

Kenya Rugby Team: After a very impressive performance the Kenya rugby team was defeated by Fiji in the finals. Kudos to those boys – well done n keep it up!