Hisanet Africa Blog

  • Safaricom Allotment Figures Out

    Posted: May 30, 2008, 11:59 pm by admin

    The Minister for Finance, Amos Kimunya on Friday evening announced the Safaricom IPO allocations. The offer was oversubscribed by 532%. The government received 266billion Kenya Shillings against an offer of 50 billion Kshs. This comes three days after Safaricom announced a pretax profit of 19.9 billion Kenya Shillings for the financial year ended 31 March 2008. This was a 16 per cent growth on its Sh17.2 billion pretax profit recorded last year.

    The allocation figures are as follows:

    • 15% - International Investors (on average)
    • 21% - Retail Investors
    • 31% - Qualified Institutional Investors
    • 31% - Safaricom Dealers
    • 84% - Safaricom Employees

    Refunds cheques are expected before June 9 2008, the date that the shares will be traded in the secondary market for the first time.

    Safaricom is the dominant player in the mobile telephony market with Celtel playing catching up. This will be an interesting year for Safaricom and investors will be watching to see how it reacts to the entrance of Econet Wireless and Telkom Kenya in the mobile market later on this year. Already Celtel is provocatively engaging in a price war that Safaricom had largely ignored. Safaricom MPesa money transfer service is expected to be a huge revenue earner for Safaricom giving it a leeway to play nice in the price wars while maintaining its revenue reputation.

    The Nairobi Stock Exchange is awaiting the infusion of Safaricom IPO refunds with KCB and HFCK rights issues expected to be the immediate beneficiaries. With a low allocation for qualified institutional investors and international investors, the demand for Safaricom is expected to be high with a substantial supply expected from speculative investors.

    Safaricom is a regional blue chip company with a significant customer loyalty and revenue base, visionary leadership and in a “new-age” industry. It is worth holding and building up.

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