Co-op Bank IPO: Update

IPO application process kicks off today and closes in a fortnight's time i.e. 13th November. Listing is on 22nd of December. There is no dvp for retail investors.


The prospectus can be found here. Browsing through it, I couldn't help but note that Co-op is just another bank perhaps in the mould of NBK. The young CEO has done a good job so far, but the future is probably going to mean more of the same. The capital raising IPO will fund:

• IT: New core banking system that will hopefully reduce cost income ratio


• Branch expansion


• Mortgage financing: This is capital intensive business


• Re-capitalising its investment arm


• Connecting Saccos-I've always wondered why Co-op doesn't concentrate on creating its own banking network with the Saccos


• Visa card franchise


• Regional expansion: Idea has legs but others are already ahead
  
  Bottomline: Ask yourself the following two questions:

1. Is it the cheapest banking shares (half yr comparison is attached) on a forward P/E (not just 2008, but 2009, 2010 etc) plus dividend yield basis? Don't forget to add in 2% selling fee...



2. Can you, if you want/need to, exit above ksh9.70 (break-even point)?