Ground set for IPO race

With Vodaphone, a part owner of Safaricom, having given their go-ahead for the government to borrow funds using its 60% holding in Safaricom via Telcom, the government can now embark on some much needed restructuring ahead of its privatization which the government targets for before the end of the year.

The government plans to repay the loan by the close of the year using funds raised from the floating of 25%-26% of its holding in Safaricom thus putting a stamp on the eagerly anticipated Safaricom IPO.

So, as Kenyans and other investors around the world prepare for the upcoming Kenya Re IPO expected at the close of Feb or early March, investors need to do some strategic calculations to ensure funds availability for this – Kenya Re and the other two – Telcom and Safaricom – IPOs expected, with almost absolute certainty, in the course of the year.

Meanwhile, the market seems to be receiving some serious bashing from fleeing investors. Prices have really slid down across the board. The declines are however somewhat contained with none of the continuous 10% nose dives witnessed during market slumps.

In yesterday’s performance, out of 39 active counters, 27 declined, while 12 realized appreciations. Nation Media captured the highest decline down 16 shillings to kshs. 313, while Equity bank shed Kshs. 13 to close at Kshs. 197. Kenya Commercial dropped Kshs. 7.00 to close at Kshs. 252 while Diamond Trust and Kenya Power both closed kshs 6.00 lower at Kshs. 78 and 303 respectively.

On the gaining side, Williamson edged up Kshs. 9.00 to close at Kshs. 159 while CFC bank, which has appreciated strongly over the last two weeks hit an all time high of Kshs. 132.

MARKET SLIDE

The 5 weeked January seems to have taken toll on investors as they started locking on their profits from the close of last week. A Prices number of counters that had gained significantly from have shed gradually over this week. Many of those locking in their profits must be smiling all the way to the bank as they reconcile their gains over as short a period as 3 weeks.

Focus is also shifting from the financial counters most of whose end year results are expected to start trickling into the market in the month of February, to the commercial and services sector. Kenya Airways whose price had dipped to a low of Kshs. 111 at the close of last week has seen its price edge back up to a high of kshs. 19 yesterday. The company closes its financial year in March, and results are usually received in the market around May. TPS East Africa has also pumped up some good demand pushing the price to Kshs. 100 levels. The company recently concluded a takeover deal for two large hotels in Rwanda, Kigali Intercontinental Hotel and Kivu sun hotel.

CMC Holdings shot up to highs of Kshs. 220 levels after the release the company end-year results that reflected a significant revenue growth, and the declaration of a 10:1 shares split along with a Kshs. 2.30 dividend. Scan group also seems to be gaining momentum following the recently released news of its acquisition of a 50% stake in Redsky Ltd., a local advertising agency whose portfolio includes Safaricom, Beiersdorf, D.T. Dobie, Stanbic Bank and Sara lee.

Corporate Actions

Both Sasini Tea and CMC are currently trading on two corporate actions with Sasini trading cum 1:5 bonus and cum 5:1 shares split. While CMC is trading cum Kshs. 2.30 dividend per share and cum 10:1 shares split. Standard Group is trading cum 1:8 bonus while Rea Vipingo, Nation Media and Eveready are all trading cum Kshs. Kshs. 0.80, Kshs. 5.00 and Kshs. 0.60 dividend respectively.

STRONG START

Festive season now over and as we usher in the new year, prices on the market are stepping up their pace with strong gains as investors take up positions ahead of the end year result releases expected to start trickling into the bourse in February. ICDC Investments realized the highest climb, up Kshs. 28 to close the day at Kshs. 353 after having declined to a Kshs. 320 low at the close of last year. The shares are currently trading cum dividend and 10 to one share split, and the books will close on both on 5th January. I expect the share price to push further up as investors rush in to acquire shares ahead of the book closure. CMC Holdings aced Kshs. 10 to close at Kshs. 186 while Kenya Commercial was up Kshs. 9.00 to close at Kshs. 250.

Increased demand on Barclays, whose price had hit a Kshs. 65 low over the week to Christmas, pushed the price to a high of Kshs. 84.50, up Kshs. 7.50 from the end-year Kshs. 77 close. Jubilee Insurance, which had also suffered the festive season lull to trade at lows of Kshs 310, was up Kshs. 7 to close at Kshs. 330.

On the loosing end, Bamburi suffered the largest loss, down Kshs. 15 to close at Kshs. 200 while Pan Africa Insurance shed Kshs. 4.50 to close at Kshs. 87. Standard Group lost Kshs. 2.00 to close at Kshs. 64.50. The company which is currently listed under the Alternative Investment Segment, recentoly unveiled its plans to move its listing to the Main Investment Segment, having attained the necessary requirements for this segment. The shares are currently trading cum bonus at the rate of 1 shares for every 8 held.