ANOTHER DISAPPOINTING ALLOCATION

Another dismal allocation for Eveready applicants as investors are forced to settle for less than 20% of share application following the offer oversubscription. It is now becoming a disappointment to eager subscribers who have to brace the never-ending queues to put in their applications, only to have a larger part of their forwarded funds returned. The allocation gets smaller and smaller with each IPO and investors will soon get wary of channeling their funds this way.

It would be so much better if brokers (or is it the registrars or receiving bank or other transaction advisors, or all) would have a way of telling when the subscription hits 100% mark then close the doors on any more applications. That way, there’d be no chance of oversubscription and all subscribers would get the exact amount applied for. That’s just my suggestion. Others are welcome but the bottom line is, we need some intervention.

Its no wonder Mumias has not received as much a following as the other offers. But then there is just no telling with Kenyans. 2 days to go and everyone comes rushing in doing the last minute stunt.

On the secondary market front, prices have settled back to the yoyo dance, down a few shillings then back again. I sincerely expected a significant correction in the month of December (which would then give me a chance to take position on a number of counters at lower prices) but it just aint happening. Just as a price starts a gradual decline, demand sets in and pushes the price back up.

Kenya Power and Nation media, both having information on possible splits tied to them, were yesterday’s highest climber, up Kshs. 9.00 and 8.00 to close at Kshs. 293 and 218 respectively. Jubilee insurance whose share float is so low and a split would go a long way in increasing liquidity on this counter, was also up Kshs. 8.00 to close at Kshs 309. KCB and Car & General both edged Kshs. 5.00 higher to close at Kshs. 55 and 218 in that order while ICDC, currently trading cum split and dividend closed Kshs 3.00 higher at Kshs. 51.

Standard Chartered captured the largest dip, down Kshs. 8.00 to close at Kshs. 202 while BAT shed Kshs. 5.00 to close at Kshs. 189.

INITIAL AND SECONDARY OFFERS

Every company listed on the Stock Exchange had to go through an initial public offer which essentially is the offering of company shares to the public. At the point of incorporation of any company, the owners have to assign a nominal value to their company which states the number of shares and the value of the shares. These are the shares that are then offered to the public at IPO point.

Companies opt for public offers for various reasons including;

* Need for expansion capital
* Divestiture – as in the case of parastatals
* Exit mechanism for shareholders
* Boosting of company profile

SECONDARY OFFER

Companies that have already floated their shares on the Stock Exchange can still release an additional number of shares through a public floatation thus a secondary offer. Mumias sugar secondary offer is one such example where the government is releasing about 92mn of the total shares still held by the government to the public.

In this case, you don’t have to be holding shares in that company in order to qualify as is the case in a rights issue. You just need to make an application as would be done in the case of an Initial Public Offer.

The secondary offer for Mumias starts today, 4th December 2006 and runs for 2 weeks to 18th December 2006. The shares are being offered at Kshs. 49.50 and the minimum number of shares that an individual can purchase is 200, translating to Kshs. 9,900. Corporates have been allocated a higher minimum of 10,000 shares, translating to Kshs. 495,000.

Also currently under offer are Stanbic Bank Uganda shares on the Uganda securities Exchange. The bank, a subsidiary of Stanbic Africa Holdings Ltd, which in turn is owned by Standard Bank Group Ltd opened its doors to an initial public offer on 24th November 2006. The company is offering a total of 1,023,773,394 shares, 20% of its issued shares, to the public at a price of Kshs. 2.80 (Ushs 70) per share and a minimum of 1,000 shares translating to Kshs. 2,800. The offer period will be closing on 22nd December 2006.

Market Review

The market recorded a rather dismal day yesterday as the index shed 62.68 points to settle at 5490.20 while turnover declined to Kshs. 262 mn. Down from the previous day’s Kshs. 314 mn. A larger number of declines than advances were captured, the highest being Jubilee incurance which shed Kshs 20 to close at Kshs. 302. ICDC was down Kshs. 13 to close at Kshs. 352 while Bamburi dropped Kshs. 7.00 to close at shs. 193. On the gaining side, Kenya Power and Standard Chartered both closed Kshs. 3.00 higher at Kshs. 250 and 202 respectively while Equity, Kenya Commercial and Williamson Tea aced up Kshs. 2.00 to close at Kshs 135, 210 and 117 in that order.