Tuesday, November 21, 2006

Safaricom IPO Dilemma

The Capital Markets Authority (CMA) requires all companies floating shares for the first time to offload at least 25 percent of their shareholding. But Safaricom owners (the State, Vodafon, and a ‘ghost shareholder’) only want to float 9% of the East Africa’s most profitable company. In that regard, the state is in a tight dilemma. Should it

(a) push CMA to accepting a 9% floatation, or
(b) negate from the IPO altogether, or
(c) let go 25% of Safaricom.

I say they let go 25% of Safaricom. However, some government officials have argued that 25% floatation is too large for the public to swallow. But i bet Kenyans would easily oversubsribe the so-called Mother of All IPOs.

1 comment:

coldtusker said...

If it is open to foreigners - I think the IPO should allow ONLY Kenyans - then not a problem.

At 8.4 Billion (PAT)x 15 (P/E) x 25% = KES 31.5 Billion = $425 Million.

This is a small to mid-size deal by USA/Japan standards.

For Kenya... CMA allows for gradual sale e.g. 10% in 2006 then 10% every year thereafter until 40% is sold.