Mashada Blogs » June 27, 2008

bankelele: KCB Rights reloaded

Fri, 27 Jun 2008 23:51:00 -0400

A half year after Diamond Trust , it’s now KCB conducting a second rights issue in the span of a few years. This comes at a time when international banks raising capital are facing more scrutiny than before.

KCB are back to ask their shareholders to chip in. In June 2004 they exceeded the 2.45 billion target and this time they are set to raise 5.54 billion ($86.6 million). How else is this issue different?

What has changed?
Then ; Now
June 04 : June 08
Focus – then Kenyan expansion & rebranding ; now East African expansion, Bank ESOP
New shares 50 million ; 222.1 million [but just 22.1 million in pre-split [PS] 2007 terms]
Price 50/= ; 25/= (actually 250 PS - pre-split 25% discount each time)
Market cap 8.7 billion ; 66.4 billion
2003 PAT 486 m ; 2007 2,974 million
Ratio 1:3 ; 1:9 (1 new share for 9 owned)
Result: oversubscribed; ? (Likely to be the same)

Cost of the offer
Budget:2004 offer – 104 million ; 2008 offer – 220 million
What costs more? : CMA approval fees – up 125% (13.75m), Transaction advisor – up 103% (8.1 million), PR/advertising – up 34% (17.4 m), Printing – up 30% (15 million), Reporting accountant up 26% (3.7m)
What costs less? Legal advisor down 58% (756,000), NSE fees down 50% (250,000)

Market players changed
NSE members 17:19
In Genghis Capital (new stockbroker?), Renaissance Capital, Bob Matthews, NIC (was solid) Afrika Investment (was Ashbhu)
Out: Francis Thuo, Nyagah, Solid, Ashbhu - stockbrokers
Morphed: Faida, Kestrel Standard Suntra (from brokers to investment banks)
IPO financiers: 2004 memorandum mentioned 10 banks and two building societies offering Rights Loans ; this time no mention as share loans are a touchy subject in 2008

Shareholders: Anchor shareholders - then and now : Government of Kenya (35%:26%), NSSF (1%, 7.8%), ICDCI (4.3%, 3.5%), Sunil shah, (2.06%, 2.33%) staff pension fund (4.12%, 2.32%)

Calendar: Record date 4/6, rights start trading 23/6, last day trade rights 11/7, last date to pay for rights 18/7, new share trade 15/8, [to stave dilution, investor accounts will be credited 10 days before new shares are listed]

Investment Decision: Advice on investing in KCB rights comes from the Nairobist newsletter.

Kenyanentrepreneur.com: Orengo: Somebody Done Fooled Me….

kenyanentrepreneur — Fri, 27 Jun 2008 17:40:48 -0400

What can I say? The Grand Regency Larceny hotel has been sold for 2 Billion shillings and Orengo was caught unawares. Poor Orengo. Did he actually believe the grand coalition illusion was real? (Did Ghosts buy this hotel?) Like I’ve said before, Kibaki is now a dictator and at the presidential and executive level, [...]

Kenyanentrepreneur.com: The Entrepreneur President - Part 2

kenyanentrepreneur — Fri, 27 Jun 2008 17:20:12 -0400

Kenyanentrepreneur.com: The Entrepreneur President - Part 1

kenyanentrepreneur — Fri, 27 Jun 2008 17:19:29 -0400

Paul Kagame in his own words talking about entrepreneurship (will kenya ever have a president like this?)

You Missed This: Grand Economic Vultures, Deception Galore

Fri, 27 Jun 2008 16:50:00 -0400

Just how much must a country stomach before her back breaks from the weight of DECEPTION? The politician may be grudgingly excused for expediency purposes but then how can you excuse one high court judge, the dragon slayer, KACC director Justice Aaron Ringera lying on oath through all spaces in his dental formula? NO, NO, NO. This is UNACCEPTABLE to have the troika of Ringera, Ndungu and Kimunya fleece Kenyan in broad day light.

Even some decorum and pretence of smartness is needed in times of grand deception. No singular word can aptly describe what this action by Kibaki through his Finance Minister Kimunya portents for Kenya. Haki you mean you can serially RAPE you own country even when already on her knees? May be Kiraitu knew something we didn’t know with his analogy of raping the willing. This sickens the stomach andleaves its contents threatening to EXPLODE. I just hope nobody pretends to defend this despicable and unforgivable act with grave and long lasting economic consequences.
You don’t engage in juvenile game of figures with a nation’s resource. Mathematics to any base never equates 2.9m to 2m even when you round off to the nearest million. So here we are LAZY mortal left to discuss the political amnesty smokescreen while brother Pattni bartered the Grand Regency for economic and judicial amnesty in the corruption courts. And AG Amos Wako provided the official government seal of approval with his trademark smile. The charge of abdication of duty and conspiracy to DEFRAUD disabuses him of the excuse to claim ignorance. May be after over 17 years of being a political AG makes him complacent and consequently sleeping on the corrupt wheel.
Economic aphrodisiacs
We attribute our failure as a nation lack of institutions but even the few that exist are run roughshod with IMPUTY. Now we understand why last years polls couldn’t have gone otherwise. The stakes were too high and the deals too SWEAT. Toss all the watchdog through the next available window. Poor Okemo! Him together with his PAC can continue retracing their circular paths inside the kraal while the horse bolted long time ago.
It appears Anglo Leasing and the Goldenberg scams were not BIG enough to sink Kenya. And the Grand Regency rip off is just the tip of a massive iceberg. Maybe the contemptuous kindergarten rider that FISHY deal would deepen relationship between Kenya and Libya is all the deceptive therapy we needed as a nation to offer our back for eternal pounding. Throw in the equally FISHY SafariCON IPO and we have the potent aphrodisiacs concoction to keep us economically and emotionally hallucinating for the next many years.
You are judged by the company you keep. First came Daudi Mwiraria whose career and reputation were smoked by the ghosts of Anglo Leasing and now Kimunya is gleefully edging for the trophy of integrating Anglo Leasing and Goldenberg both put together. And cap it all by tracing some of the most corrupt deals minted in NOSTALGIC 1970s under the reign and watch of one and only one DURY ERECTED. Folks, we are in a deep hole and the sooner we stopped digging the better otherwise Mugabe would look a saint for at least he brutalizes and rapes his people overboard.

Kenya Imagine: Migritude, a cultural spirit of our times

Fri, 27 Jun 2008 16:17:00 -0400

Justus Siboe Makokha writes on East African Asians and their contributions to the arts here.

In the past month, lovers of literature in Nairobi and Mombasa have had the exceptional chance of celebrating the official homecoming of Migritude , a powerful, one-woman oral poetic performance by Shailja Patel. The gifted artist entertained and educated enthusiastic spectators for four days at the Phoenix Theatre, Nairobi, 3 weeks ago. She then staged her show in Mombasa at the Aga Khan Academy, Likoni in late July. Her homecoming performances are courtesy of Ford Foundation, which is doing a laudable job supporting the revival of the arts and literature in post-Nyayo Kenya.

Kenya Imagine: This week's imagine diaries

Fri, 27 Jun 2008 16:02:00 -0400

It's Vogue to Be Black-- Amina on Vogue's Black issue-- on newsstands this week.
It is certainly a departure from the usual white models (who all look alike if
you ask me). However, as we know fashion is cyclic and these women will soon not
be in vogue. Although the fashion industry reflects some on society, we
cannot rely on it to direct the trends on who is beautiful and who is not. Even
with white women, models hardly represent true society.
Reapology-- Sembe after killing someone writes the deceased a letter from prison, apologizing.
I have sat for long hours in this confined facility and reflected on how my actions have landed me in the place of collective solitude. I believe in the rehabilitation process, and it requires me to take responsibilityof my deeds.
Dating Escapade #1-- Johari describes a date that did not go so well.
Mwangi cross-blogs his interview with Mashada founder and Ushahidi co-founder, David Kobia.

Marian's Blog: "... Mugabe still wins"?

Marian — Fri, 27 Jun 2008 15:04:00 -0400

"Even if we vote for the opposition, Mugabe still wins." - Woman refugee from Zim (Zimbabwe) Hard on the heels of January's tragedy passing as Kenya's 'presidential elections', it is equally as nauseating to observe the speed and trajectory of...

The Displaced African: Displaced African Review: Four Hour Workweek by Timothy Ferriss

Mwangi — Fri, 27 Jun 2008 12:04:17 -0400

This is day 2 of My 4 Hour Work Week Journey

Now, below I will mention 4 things I liked about the book, the 4 hour work week and won’t talk about any negatives because I’m sure those will become self-evident as I work through the book over the coming days. That, and I don’t want to psyche myself out too early in my 4 hour work week journey.

4 Things I Love About the Four Hour Workweek

1) He is Empirical: To name a book ” 4 hour workweek” screams:

Hyperbole! Hype!B.S. !

So when I began to read about Tim, I expected his writing and his work to sound like a circus director or a car salesman: a lot of sales talk with very little substance to back it up.

Boy was I pleasantly surprised. If I could summarize one of Tim’s oh-my-goodness-that’s-genius-approaches-to-life-it-would-be:

Test your assumptions

Don’t automatically assume the limitations placed upon you by society, your background or yourself are true. Instead, conduct small tests and see what happens. As a result of Tim doing this, a lot of what’s in the four hour workweek isn’t an abstract manual but rather:

2) A Fascinating True Story: I want to do a lot of great, oddball things with my life before I die. I think I have found a person with an equally quirky spirit in Timothy Ferriss.

The man has, and is, revolutionizing the Western approach to work. He is the Chinese National Kickboxing Champion. He has won international tango competitions. He is a break dancer. He has been on television in Hong Kong. He has done all this while running a multinational company.

He didn’t accept what others took as the norm or limitations. He lifestyle supersedes any limits society might have imposed on him and this is part of the reason that I’m so drawn to him. It’s also the reason that:

3) He Has Backup from Heavy Hitters: I became a fan of Tim when I heard an interview he did with my blogging go-to-mentor Yaro Starak.

Among his mentors are the man who has sold 130 million books worldwide, Jack Canfield. He has been invited to give talks to everyone including the numero uno themselves, Google-check out the video at the very top of the article.

He isn’t some marginal rebel who is hated by the greats in society. His work appeals to a broad spectrum of folks from lone contractors to CEOs of Fortune 500s. Lord knows I’m African and authority figures influence me big time.
Finally I like the fact that:

4) He Teaches Us How to Separate Hours from Income: Now many Africana will tell you that this idea is simply preposterous. I watched my folks clock in 8-12 hour days 6 days a week and that’s the only way that folks can make a living right?

When I interviewed David Kobia and he spoke about the way his mother couldn’t understand how he could not be working in an office and could be doing all his work online.

I think I kinda went through the very same thing when this idea was presented by Jay Abraham, Yaro Starak and Tim Ferriss that your income didn’t have to be linked to the hours you work but rather the value you provide. Now however, I have embraced that this in fact possible: Me likes and I want a piece of that.

Anyway, someone left me a comment saying that I should do more posts where I present the options available for immigrants in regards to economic stability and prosperity.

So here goes: the trial continues. I have spoken to a few of you who are trying and living out alternatives to the bread and butter mill that is the 9 to 5. Together let’s build a library full of options that future immigrants can use to thrive in so far as the dollar is concerned.

I’m rambling now, but I ramble because I’m excited. Anyway either:

i) Click here to buy a copy of the 4 hour work week from Amazon.com

ii) Pay a visit to his blog and learn a little more about the man and his great book.

And enjoy the rest of your day or night,

Mwangi

bankelele: Drip Friday

Fri, 27 Jun 2008 10:04:00 -0400

This started out as a post on DRIP’s – but went on to become a ramble about other drips (leaking taps) where small/retail shareholders and their companies lose hundreds of shillings individually and collectively lose millions of shillings from the investment fund pools in a vicious circle:

(a) DRIP’s are automatic dividend reinvestment programs. They are available in advanced financial markets and enable dividend cheques to be automatically re-applied to buy shares in the company - this would be very useful for the nearly 100,000 shareholders of Eveready who got 60 shilling ($0.93) dividend cheques this year that may cost more to clear than they are worth (the amount is so small, KRA can’t get their 5% withholding tax) local alternatives/solutions - small dividend cheques can be (i) processed through DRIP’s or (ii) Companies like Scangroup now have an arrangement where dividend cheques under 10,000 shillings can be cashed over the counter at no charge to investors at any Equity Bank branch. Shame that KCB branches doesn’t allow the same for their own dividend cheques (iii) More NSE companies should push for DRIP clauses for their owners (shareholders) as vigilantly as they do on corporate issues for their own employees (ESOP’s) and the Government (unclaimed dividends).

(b) Post-Safaricom Drip
big leaks
(i) There are investors who got no shares in the IPO because their stockbrokers did not place their orders, misplaced them, or for some other unthinkable (and perhaps sinister) reason. They are now chasing refunds of idle funds that have missed many opportunities over the last three months
(ii) There are investors who got 21% allocation, but because they took bank loans for the IPO, now owe the banks more than their shares are worth (and whose price is sliding). In addition to being charged interest, they have to pay for loan statements, transfers, and other fees for many months - and most can’t sell their shares until they pay off the loans.
(iii) The banking sector whose rules on Safaricom IPO refunds seem to change every other day – from forcing people without bank accounts to open accounts to receive their money (there was no obligation going into the IPO, so why should there be coming out? to not allowing encashment of IPO cheques (a DRIP formula would have been handy here) , to specifying which banks people could encash their cheques. solution M-Pesa the cash to investors - which was a clause in the initial IPO prospectus and would have boosted Safaricom’s 2009 revenue and profits
(iv) The Capital Markets Authority has imposed a Kshs. 1,000 charge ($15) for every transfer/consolidation of shares. This fee will be borne by thousands of Safaricom investors when they eventually pay off their bank loans

(c) Companies Laws & Registrars:
(i) Stale dividends: Thanks to vague laws that don’t specify how long companies can take between the time they announce dividends and eventually pay them. It’s so long that some companies may not be able to afford the dividends they announced months ago as they are still recovering from post-election events.
(ii) Company Registrars: NSE companies complain about having too many shareholders and the cost of mailing them accounts each year. The KCB rights issue is on now and I have received five copies in the mail in the last week. So how many of KCB’s 150,000 shareholders are genuinely different? Many times the problem is borne out of IPO’s where people apply in multiple names and accounts in the hype hope of getting higher allocations. But once the euphoria dies down, and after chasing numerous refund cheques, they forget or make no effort to consolidate their accounts. This leads to them getting five smaller dividend cheques and five sets of accounts - which are very expensive for the company to mail out to every shareholder. There are also another class of (reluctant) shareholders - who sold some of their shares, but because of the minimum trade lot order amounts (100 shares minimum per trade) are now left with a balance of shares that they can’t sell, get meagre dividends for, but still get the same reports mailed out to them.
local solution/alternatives (i) Allow people to consolidate their accounts with the company registrar (but see b (iv) - the CMA has imposed an additional charge [after the Safaricom IPO] for account consolidation (ii) The NSE/a broker/or agent should set up an odd lots board where investors can sell their small lots of shares – 3, 10, or 50 shares, provided that they are liquidating the entire holding ( I hear one stock agent does this, but would like to hear from more and confirm that they do offer this service) (iii) Proactive share registrars: - who should realize they are sending out 5 bulky letters to the same address, and perhaps initiate a consolidation process with investors (iv) e-mailing of accounts & reports to shareholders: Several companies have amended their laws to allow for e-mail of information - but so far, the only one I have ever received by e-mail was from across the border (Stanbic Uganda).

So there’s a long rambling post; not meant to blame or criticize, but to inspire other ideas and debate. What are your suggestions on other ways to cut costs of serving the small investors?

Other corporates

Safaricom day 14 and 15: After just three weeks of dominating (actually killing) trade at the NSE, the company has been given a waiver to be admitted to the NSE index, punting Serena Hotels (TPSEA)

Friday: Deals 4,858 Turnover Kshs. 564 million ($8.81 million) Average 7.26 High 7.40 Low 7.20 Last 7.30 Volume 77.8 million - Strong session. Very constructive. We based out at 7.05 yesterday [v. positive on the charts because the post listing low was 6.65 and whenever got near there]. We are still witnessing some de-leveraging and therefore, sellers did scatter until half way through yesterday’s session. However, given the turnover since its listing, we must be nearer the end than the beginning of that process.

Thursday: Deals 5,342 Turnover Kshs. 410 million Average 7.29 Closing 7.25 High 7.50 Low 7.05 Last 7.20 Volume 56.2 million - Intra day low was 7.05, but we appear to be basing out. Sellers tipped their hands and chased the market down over the last three sessions. Near term, we have seen the bottom. [Commentary and data provided by Rich.co.ke - Nairobi Stock Exchange Authorized Data Vendor]

Housing drip: the Housing Finance rights issue closed today. I hope they realize their target, but they tried to time it to coincide with Safaricom refunds, with its delays in refunds and clearing cheques, then they got caught up by the KCB rights issue.

No purr? What’s up at Marshals? They have almost 100 vehicles (Kia and Peugeot - whose franchise has ended) vehicles currently at Mombasa Port that the Customs Department wants to auction. At least their former flagship branch in the city (& rumored new PM’s office) on Harambee Avenue has now become a Stanbic Branch.