27 March, 2008

Safaricom IPO-Buy When There's Blood On The Street!

There's a cliche among stock market fraternities that one should buy shares when theres blood on the street.What the cliche' actually postulates is that the best time to buy shares is when they are adversities as people tend to offload precious shares at concessionary rates in a hurry only to regret later.As it is the Government of Kenya is poised to offload a percentage of its shares to the local market through an initial public offering.On the other hand the Orange Democratic Movement which has an immense and persuasive following is against the selling of the shares until a Cabinet is constituted and issues regarding a silent partner in Vodafone Kenya by the name Mobitelea (K) Limited are sorted out!

This impasse will have the effect of many Kenyans of particular political persuasion opting out of the shares at the present.That in itself will create an opportunity for the intelligent speculator to buy shares and offload them when the share value price of Kshs 5 bob a share rises immensely!On an intelligent perspective the issue of Mobitelea is a non starter.If it is proved that the sinister Mobitelea Company fraudulently bought shares from Vodafone Kenya the net effect of the IPO will be to increase the share value of vodafone Kenya alongside the shares of Mobitelea.Now when Mobitelea intends to offload its shares in Vodafone(K) it will be at a higher value than they bought them.At the same time it must be certain to the Kenyan public that the shares being offered are solely Telco Telkom Kenya's share in Saafaricom which is estimated at 60% of the hareholding.The shareholding of Safaricom is muddy with a lot of conflicting reports worse is that while Company documents at the companies registry are supposed to be public,both Safaricom and Mobitelea Company files are unavailable at the moment for public scrutiny.These are the issues that raise a query about the transaction.

Transparency is important in order to quell any rumours and also for purposes of ascertaining the truth but where a matter is shroud with secrecy ,suspicions arise!If there is fraud Kenyans will end up perpertuating grand corruption making a penny here whereas billions are lost !That is a path that must be avoided.It simply cannot continue to be business as usual !Another issue also readily apparent in the sale revolves around the conflict of interest seeing that theLead Advisor Dyer& Blair Bank is owned by Jimnah Mbaru who happens to be retailer of the shares and a chairman of the Nairobi Stock Exchange.He simply has too much vested interest and a prominent role in the share offering that he shouldnt have been given the multiple roles for the sake of decency and public confidence in the transaction.But that now is water under the bridge as the IPO is scheduled for offering commencing 28 March, 2008.

For a peek of the prospectus bankelele has managed to obtain it a day before the prospectus,how ?Kenyans are resourceful.Happy buying!

1 comment:

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