Safaricom IPO (OFS) is finally upon us after years of procrastinating and politicking (how come nobody is saying anything about Mobitelea?). Firstly, the numbers:
Number of shares offered: 10bn
Market value of shares offered: Ksh50bn
Minimum share application size: 2,000
Allocation for foreign investors: 35%
For Kenyans and East Africans: 6.5bn shares
Share application dates: 28rd March to 23rd April
Shares listing date: 9th June
Safcom PBT: Ksh17.2bn for 2006 (will probably hit Ksh20bn+ for 2007); 9.5m subscribers which equates to almost 85% of the market
EPS (assuming '07 PAT of Ksh15bn): 0.375
- The potential growth is still there, because only 1/3 Kenyans are using mophos today and one would imagine that this will grow to 50% of the population if the economy picks up its 2002-7 momentum
- Beyond growing subscriber population, Safcom will be able to leverage higher ARPU from a proportion of its current population
- Safcom will (if it hasn’t already) go for a full licence so it can also enter the internet provision market
- Don’t forget mpesa
- Price forecast: May go to Ksh12, then down but will steadily rise ala Access Kenya
- Kenyans will be chasing Ksh6.5bn, equating to around Ksh32.5bn i.e. a sure oversubscription maybe of around 50-100% given the stock on offer
- All brokers will struggle to cope with applications-Kenyans typically wait till the last week.
- Its not yet clear how Nyaga’s customers will be treated given the broker is down, but it represents an opportunity for others to take over 200k customers
- Assuming refunds will happen, beware that some of your cash will be held up for 3 months minimum.
- Assuming that Kenyans spend around Ksh40bn on the IPO, the NSE will be drained and may go below 4,500. A buying opportunity? Maybe.
- Whatever happens, another Ksh32.5bn will be in the NSE, does it mean counters may be depressed for longer than the IPO period? One for good investors to ponder
- Given the anticipated liquidity crunch, I hope GoK introduces dvp to a wider investor population other and has more than one bank involved in the process unlike KCB’s position in previous IPOs, otherwise the banking sector will suffer temporary liquidity issues.
- Unless the process is better handled, it could be an opportunity for some broke broker to eat.
- It'll remind the outside world that Kenya is indeed capable...