Hisanet Africa Blog

  • Safaricom IPO: High Anticipation, Market Effect

    Posted: March 14, 2008, 11:56 am by admin

    Anticipation of the Safaricom IPO some time at the end of this month has already caused ripples at the bourse with most investors seeking to sell off their shares.

    The market over the week in review has witnessed a substantial amount of supply of shares, a trend which is expected to prevail in the days culminating to the IPO. Since the political settlement reached two weeks ago, the market has experienced a lot of positive energy, a trend that was expected to spill over into this week.

    Investors who had taken positions at the beginning of the year when prices were very low have managed to take profits after the price surge that was witnessed right after the signing of the power sharing deal. Take for instance the week right after the announcement, the NSE 20 Share index gained a total of 282 points (approx 5%) to settle at 5,354.68 points against the 5072.41 recorded in the previous week.

    However, rumors of the IPO have led investors to sell of their shares, causing most of the counters to dip. The tendency of investors selling to exit their positions ahead of an IPO was witnessed during the Kengen IPO in 2006.

    A preliminary valuation of the company, which is Kenya’s most profitable; put the net worth of the company at Kshs221billion. The pricing of the Kshs55billion sale is expected to be discussed after the actual date is known.

    The unconfirmed reports on the IPO pose a few questions for the investor. For instance, what will the impact of the IPO in the market? How do we expect the secondary market to react once the shares start trading? And most importantly, how far up do we see the share moving once it starts trading?

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Fish cakes

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The end of the fish cakes

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