Wednesday, June 18, 2008

The mess that Safaricom IPO has become

Investing in Safaricom was supposed to be easy, a matter of buying shares in Kenya’s most profitable company and getting refunds for shares not allocated. It was well known that it was going to be oversubscribed.

It started with controversy over government’s decision to offload the shares and whether it was right. It was a campaign tool, and some people were urged not to buy the shares but the boycott call was later retracted.

Then the IPO kicked off, long queues and endless advertisements of how our lives are going to change. Yes, it is good that we get to own shares but at what cost?

The allocations did not justify the hype. Queue a whole day, get a loan from the bank at 15% per annum interest, and then get allocated 420 shares. But again, those who feel the allocations are low should buy now that they are floated.

Then the next scene in the drama is the refunds. Brokers holding the money, Safaricom pointing fingers at unscrupulous brokers, CBK acknowledging the problem, asking the Capital Markets Authority to intervene and the CMA is just silent, how much more drama do we need.

It was argued that the IPO will benefit the ordinary person but now the only thing I see is the people trying to get their refunds to pay off the loans and the high interest rates and others sitting back waiting for the chaos to end before making the claims.

Ends

3 comments:

Acolyte said...

And that is why I shall continue to make my stock investments in a transparent market that I can understand without the chance of being screwed by my stockbroker namely the American Stock Exchange.

BG said...

Welcome to investment vehicle.Risk and return are related,we obviously know returns carries some degree of risk because the returns are always unpredictable.We can't say this is a mess yet,we have to give it a few months.But for those who borrowed to make profit overnight.This might leave a bad taste in their mouth.This is how you measure your risk tolerance.But lets not panic the trading just started the other day.

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