Radio Africa Holdings IPO

Radio Africa the holding company to several Kenyan fm radio stations is seeking to have its IPO on the NSE this year to finance its expansion plan. The Group owns Classic 105, Kiss 100, East Fm - 106 fm (for the Asian community) and an additional three new radio stations namely Jambo Fm, X FM and Smooth Fm. The targeted amount for the IPO has not yet been disclose ( to be up dated).

The group also publishes the daily newspaper, Nairobi Star (I call it the gossip paper). The Nairobi Star, which acquired its own printing press, is set to expand to the rest of the country in the course of the year. Before acquiring the print press the paper was being printed by Nation Media Group printers. The paper does not separate its employees between radio and newspaper, with most of its radios presenters doubling up as its columnists e.g. Caroline Mutoko’s Monday column where she says whatever she likes. The paper also employs other renowned personalities as their columnists’ e.g. Aly khan Satchu’s (Stocks – Star Portfolio) and Tajudeen’s - Bio (Commentaries).

Initially the paper got some very harsh reviews but over time it has managed to prove that it's a champion in solid grapevines. On lauching the paper sold over 50'000 copies in a day but its has since dropped. Competition from Nation Media's Metro did not manage to dumpen demand by its target market of between 18 to 35 years olds.

Radio Africa Holdings IPO would bring the number of listed media firms on the NSE to three, after Nation Media Group and Standard Group. Surprisingly, neither the Group nor its subsidiaries (fm radio’s and newspaper) websites are up and running. Something, I think, they should act on before going into an IPO.

The End of Cheap Money

Revelations that many Kenyan banks are in trouble over loan defaults are continuing to deepen with a recent indication that most of the personal loans given were mostly to individuals under 30 years of age. Unconfirmed report indicates that over 50% of the loans were given to young persons to finance their quest to owning cars and homes in major Kenyan cities.

These young borrowers end up not able to repay their loans and have to choose between paying their mortgages or loans, with most of them opting for the mortgage. They then take a loan refinancing option that consolidate all the other loans and end up with one huge monthly installment due to the even higher interest to be paid to the refinancing bank (mostly KCB). Tough economic times that have seen some employees being laid off have worsened the situation even further.

Bank loans sales agents (loan hawkers)

Many of these young borrowers were as a result of loan hawkers who were keener on getting higher commissions than the quality of borrowers they got. The end results may be an increase in volume of non-performing loans, which may force the central bank to react by increasing the banks cash ratio – rescinding an earlier decision to lower it. The only options for the banks are in rescheduling the loans repayment periods without increasing interest costs to the borrower or resort to external credit collectors, who may see many borrowers in court.

I’m surprised that the government’s revolving funds, such as the youth and women’ funds, have performed better than commercial banks’ unsecured loans.

State of Kenya's Telecoms Industry

I stumbled upon a research report by Budde Communication Pty Ltd. on the state of telecoms, mobile and broadband in Africa in 2008. Though I couldn't access the full report due to the cost implication here is a summary of what the report said about the state of Kenya's telecoms industry:

"Despite the civil unrest which cast a shadow on Kenya at the beginning of 2008, the fundamental transformation of its telecoms market continues. A consortium lead by France Telecom acquired a 51% stake in the national telco, Tekom Kenya. The IPO of the country’s leading mobile operator, Safaricom, went ahead very successfully in April, which is an encouraging sign for Telkom’s planned IPO. A new, simplified licensing regime designed to increase competition was introduced mid-year. Several competing wireless broadband networks and national fibre backbones are being rolled out, and several international submarine fibre optic cables are expected to launch from 2009. This will bring bandwidth prices down and open the Internet up to the mass market. The country’s GSM mobile market finally moved beyond a duopoly at the end of 2008 when Econet and Telkom Kenya launched services as the third and fourth players. Convergence is ever-present in this dynamic and fast growing market with voice, data and video/broadband TV (triple play) services, the introduction of 3G mobile services and mobile banking empowering the largely un-banked population."

Read more on other African countries here

On a light note: What exactly does Orengo mean when he says this

“I have said that at a certain stage if things continue the way they are, then some of us will be prepared to say things that probably as a member of the Cabinet, may be inappropriate for me to say,”

Just say it like it is Orengo!

Obama Phone Launched in Kenya

Handset vendor, Mi has launched a Barack Obama branded mobile phone for sale here in Kenya - the home country of the President Elect's father. The handset is co branded with the Obama colours and logo and is being sold for Ksh.2,500 (≈$30). Read more

We Are Not Alone

Welcome to 2009

2008 is finally around the corner and we are in the New Year 2009. 2008 was quite a busy year, but as time goes by it will only be a fading memory. I took the liberty of writing a final annual summary for the business year 2008 and some things I expect in 2009.

The NSE

The NSE was full of surprises in 2008. First there was the biggest ever Safaricom IPO that went sour, ushering in the bear run and brought back some sanity to our over-valued securities market. The Cooperative bank IPO that followed was only 81% subscribed a sure investor confidence reality check. Unilever got de-listed, Uchumi did not get re-listed, and some two rights issues from KBC and Housing finance graced the NSE during the year.

Broke Brokers

Yet again another market player, Nyaga stockbrokers, went under and several other were put on the warning radar. Discount Securities was put under statutory management following some internal squabbles and one of the biggest securities agent Tsavo was also in some trouble of its own. The depressed market was not doing any good to the brokers as commission revenues diminished.

Strange Deeds

2008 was full of strange things in the Kenyan business cycles. the resignation of Centum’s CEO, Peter Mwangi, and a month later NSE Boss, Chris Mwebesa, a few months after reappointment. The former ended up replacing the latter on the NSE seat, making it seem like it was all choreographed by the big boys. Mwebesa later went back to his former job at CFCfs, leaving a begging question if he was pushed out?

Then there were several share manipulation allegations that rocked the market, particularly the Crown Berger and East Africa Portland Cement cases. Despite CMA’s efforts insider trading is still very rife in our bourse. In good light though, the Uchumi insider trading case was opened where former KCB CEO, Terry Davidson, was charged.

Facing the Bear

Finally, after the perpetual bull ride that had characterized the NSE for the last few years, the bourse was hit by a full blown bear run. Investors are still counting their paper losses, while the searching for the elusive bottom. Every time the indexes hit a ‘decisive point’ analysts are in haste to say that the market will not fall bellow that (NSE 20 – 4000, 3500 or 3000), but every time it just keep on dropping. The market index has dropped 43% from a high of about 5,445 in December 2007 to as low as 3,106 in December 2008.

Investor’s Goodies

In light of the changing investors’ sentiment, investment firms and also the government have come up with better investment packages that target the low earners. Old Mutual launched the Toboa investment scheme that allows investors to invest as low as Ksh.7,500 per months in their different unit trust combinations. Similarly the government lowered the minimum investment in Treasury Bills, to attract small investors and also help the blotted government to raise the much required funds.

Acts of God

The year saw some major changes both in Kenya and the world scene. Kenya opened the year on a bad note with the post election violence rocking every sector of the economy (some firms are yet to recover?) most importantly the political terrain. The Global financial crisis could not have come at a worse time, with the oil and food prices sky-rocketing everything went to the dogs. Obama’s win was a lifting moment from all these misery.

Expected in 2009

I’m not very optimistic about this New Year. However I expect the following to occur during the year:
- A few more IPO’s from Nakumatt, K-rep and some de-listings or suspensions on the NSE (Eveready? Marshall E.A.)
- the NSE will either plateau at between 3,500 and 4,000 or drop even further with most of it pegged on the listed financial firms
- the global financial crisis may get worse in the first half of the year before getting any better
- new regulations by CMA will reign some sanity to the market and in the process some brokers may fold