Professional Documents
Culture Documents
LESSONS LEARNT
STAKEHOLDERS WORKSHOP
24 SEPTEMBER 2008
PRESENTATION OUTLINE
1.
2.
3.
4
4.
5.
Background
Key lessons
Key Challenges
Recommendations
The way forward
BACKGROUND
The process towards privatization through
the NSE commenced in June 2007 with the
Government placing an advertisement for
applications for provision of advisory
services
Competition for arranging the IPO started in
earnest in August with the invitation of 75
advisors to present technical and financial
proposals on how the transaction should be
structured
BACKGROUND
The firms were organized
g
in consortia,, which
for the first time included international players
The offer
Th
ff attracted
tt
t d severall high
hi h profile
fil
international investment banks such as
R
Renaissance
i
C
Capital
it l and
d Morgan
M
Stanley.
St l
The application for approval of the prospectus
for the offer for sale by the Government of
Kenya of 10 billion ordinary shares and listing
of 40 billion ordinary shares of Safaricom was
made
ade to the
t e Authority
ut o ty o
on 20
0 November
o e be 2007.
00
4
BACKGROUND
The 10 billion shares on offer represented 25% of the
issued shares in Safaricom
The Authority approved the prospectus and the offer for
sale of 10 billion ordinary shares and listing of 40 billion
ordinary shares of Safaricom Limited on 14th March 2008
The Offer opened on 28 March 2008 and closed on 23 April
2008.
The allocation results were announced on 30 May 2008
indicating the IPO was significantly oversubscribed.
The dispatch of share certificates and refund cheques was
to commence on 9 June 2008.
5
OFFER STATISTICS
Shares Offered
adjusted for Claw
back (Millions)
Shares Applied
Subscription
Rate
Allocation
Rate
Retail
4,880
22,637,470,460
464%
21.2%
QII
2 730
2,730
321%
31 1%
31.1%
Authorized
Dealers
130
422,158,200
325%
30.7%
Employees
260
307,549,800
118%
84.5%
International
2,000
14,220,000,000
711%
As per the
Book Building
Total
10,000
46,344,343,460
463%
2. Absorptive
p
Capacity
p
y
Di ib i b
Distribution
by D
Domicile
i il
Accounts
opened
Pre IPO
During IPO
Post IPO
As at 20/3/2008
20/3/2008 26/6/2008
Total
896,213
896 213
849,390
849 390
1 745 603
1,745,603
Share
immobilization
5,257,183,506
15,364,315,550
20,621,499,056
FI/FC accounts
6,252
2,182
8,434
1,261
7,984
9,245
EAI/EAC
accounts
10
Share
Volume
(Mn)
NASI
NSE
Index
Mkt. Cap
(Ksh bn)
T/O Ratio
(%)
Bond T/O
Jan
7.4
205.28
4796
777.1
0.9523
3.9
F b
Feb
8 01
8.01
198 83
198.83
94 24
94.24
5072
830 6
830.6
0 9644
0.9644
32
3.2
March
7.32
180.64
94.64
4843
781.7
0.9364
14.3
April
5.64
141.77
106.66
5336
908.2
0.621
23
2.3
May
6.84
168.03
108.82
5176
916.8
0.7461
3.04
June
22.13
2154.9
112.11
5185
1230.7
1.7982
4.91
July
14.6
984.01
104.64
4868
1122.2
1.301
2.4
August
7.489
490.78
97.55
4648.78
1102.1
0.6795
8.886
Sep
3.838
178.11
85.99
4055.23
953.21
0.4026
3.56
11
23.50
23.56
23.00
22.63
22.50
22.00
%
21.82
21.50
21.00
20.87
20.50
20.00
19.50
JUNE
JULY
AUGUST
Month
Safaricom Market Capitalization
12
SEPTEMBER
Safaricom p
price movement as a p
percentage
g of Total
Market Capitalization 2008
1400
1200
Price (Kshs)
1000
5
800
4
600
3
400
2
200
1
0
0
June
July
August
Month
Market Capitalization
13
September
Sh
Share
price
i ttrendsd Safaricom
S f i
Safaricom Price movement ((June-September
p
2008))
9
8
7
Price (Kshs)
6
5
4
3
2
1
0
Week 1
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
14
M k t Performance
Market
P f
1500
10
1000
500
15
Au
gu
Se
st
pt
em
be
r
Month
Share Volume
Equity Turnover
Share Volume
e (Mn)
15
Ju
ly
2000
Ju
ne
20
ay
2500
Ap
ril
25
Ja
nu
ar
y
Fe
br
ua
ry
M
ar
ch
22130
20000
15000
14446.45
14600
10000
7489
5007.332
5000
3838
2170.024
1164.642
0
JUNE
JULY
AUGUST
Month
Safaricom T/O
16
NSE T/O
SEPTEMBER
Market Turnover
Turnover from
f
January to May was Kshs 700
billion while June alone recorded a turnover of
K h 44 billi
Kshs
billion or approximately
i
l Kshs
K h 1.4
1 4 billion
billi
in aggregate commission in just one month. The
same is
i applicable
li bl for
f fund
f d managers and
d other
h
intermediaries.
17
Safaricom turnover as a p
percentage
g of NSE
turnover
70
65.3%
60
50
40
%
34.3%
29%
30
30.3%
20
10
JUNE
JULY
AUGUST
Month
18
SEPTEMBER
Prior
P
i to
t the
th OFS,
OFS over 700,000
700 000 CDS accounts
t were
opened.
19
Foreign
g Investors Net flow
10.00
8.52
8.33
5.00
0 80
0.80
0.04
0.00
March
April
May
June
-0.83
July
August
September
-5.00
-7.36
-10.00
-13.90
-15.00
-20.00
20
KEY CHALLENGES
1. Application processing capacity
The capacity to process the IPO was outstretched for the
own challenges
g
Cases of incomplete, erroneous applications after the closure
d t and
date
d in
i certain
t i incidents,
i id t rejection
j ti off applications
li ti
21
KEY CHALLENGES
22
2.
Refund Process
F il
Failure
to
t effect
ff t ETF as preferred
f
d by
b investors
i
t
KEY CHALLENGES
3. Allotment
High local demand leading to low allotment of 21% for
i di id l
individuals
There ha
havee been ssuggestions
ggestions that Ken
Kenyans
ans sho
should
ld be gi
given
en
4. Book building
There was a hybrid of fixed price and book-building
23
KEY CHALLENGES
5. Conflict of Interest
There are concerns over the zero or near zero bids
Same person performing Advisory role and Placing Agent Role in
the IPO
KEY CHALLENGES
7 Fraudulent Activities
7.
Cases
C
off fforged
db
bankers
k
cheques,
h
d
deposit
it slips
li and
d
misleading
i l di information
i f
i
25
OTHER CHALLENGES
Liquidity squeeze
squeeze- Liquidity in the money market was
26
OTHER CHALLENGES
Central Depository System-Cases of failure to detect
multiple
lti l application
li ti andd uploading
l di data
d t to
t wrong accounts
t
were reported.
Use of Collective Investment Schemes high charges by
28
ISSUE
1 Application
processing
capacity
29
RECOMMENDATION
OUTPUT/
TARGET
TIME
FRAME
Improved
efficiency
October
2008
Enhanced
investor
protection
October
2008
Increased
compliance
Next IPO
Improved
efficiency
June 2009
All received
i d applications
li i
to be
b processedd andd
submitted to the receiving bank every 3 days
E h
Enhanced
d
investor
protection
Next
N IPO
Dela s in ssubmitting
Delays
bmitting applications by
b agents
should be penalized
Increased
compliance
Next
Ne t IPO
OUTPUT/
TARGET
ISSUE
RECOMMENDATION
Refund
Process
Immediately
Immediately
TIME FRAME
non-compliance
nonp
and/or errors
errors..
pprocessing
g of
All IPO applicants to be required to have bank refunds
accounts..
accounts
The provision for interest accruing to the ICF Efficient
should be amended to cover the period until all the processing of
refunds have been processed by the receiving refunds
bank..
bank
30
Immediately
3.
ISSUE
RECOMMENDATION
OUTPUT/
TARGET
TIME FRAME
Allotment
Broader
ownership of
national assets
by Kenyans
Next
Privatization
IPO
Increased
market
confidence
Next IPO
Increased
investor
awareness
Immediately
4.
Book-Book
building
Increased
market
confidence
October 2008
5.
Conflict of
interest
Improved
p
corporate
governance
October 2008
31
6.
7.
8.
ISSUE
RECOMMENDATION
OUTPUT/
TARGET
TIME
FRAME
Borrowingg to
buy shares
Targeted
g
investor education
Informed
investors
Immediate
Enhanced
cooperation
p
October 2008
Better liquidity
spread
Next IPO
Better
efficiency
Next IPO
Better risk
management
Immediate
Better risk
management
Immediate
Liquidity
Squeeze
Fraudulent
activities
32
9.
10.
11.
33
ISSUE
RECOMMENDATION
OUTPUT/
TARGET
TIME
FRAME
Central
Depository
System
Better risk
management
Immediate
Better risk
management
Immediate
Enhanced
investor
protection
Immediate
Better risk
management
Immediate
Better risk
management
Immediate
Increased
investor
confidence
Immediate
Nominee
accounts
Systemic
risk
ISSUE
RECOMMENDATION
OUTPUT/TA
RGET
TIME FRAME
12.
Use of CIS
Informed
investors
Immediate
13.
Investor
education
Informed
investors
Immediate
14.
Regional
integration
Integration of
E A Capital
E.A.
markets
Ongoing and
Continuous
34
WAY FORWARD
35
WAY FORWARD
36
WAY FORWARD
Adequate communication
Ad
i i where
h there
h are unforeseen
f
delays in the IPO processing to ensure that investors
remain
i engagedd andd to pre-empt any nature off panic
i
in the market.
37
END************
END
38