urn:www-mashada-com:feeds:atom Mashada Blogs » bankelele » June 2007 2009-11-21T22:01:03-05:00 http://bankelele.blogspot.com/2007/06/kenya-re-ipo.html 2007-06-30T03:05:00-04:00 2007-06-30T03:05:00-04:00 late than never, along comes the Kenya Re IPO shuffled to the top of the privatization deck . The ace card is still Safaricom, while Kenya Pipeline should be a joker in waiting.

It’s nice to venture back into the IPO game (after passing on the last two - Access Kenya, Eveready) and I should have my Kshs 19,000 ($288) ready to go after getting the prospectus(Minimum is 2,000 shares for individuals at 9.50 per share).

The IPO delay has not been explained, but the former managing director and financial controller of Kenya Re did not help matters by getting indicted for corruption related offenses just as the process was underway nor did a late attempt to absorb the run- down Kenya National Assurance (KNAC 2001) into Kenya Re.

Despite the 2,000 share minimum for individuals you can expect it to be over-subscribed going by the numbers who applied for Eveready and the amounts individuals applied for with Kengen. While recent IPO's (Access Kenya, Eveready) have not performed as well as earlier ones (Kengen, Scangroup, that could all change now .

Foreign and institutional investors got burnt in Kengen (the first IPO in years) after they applied for millions of dollars worth of shares only to end up with $1,000 each. Subsequent IPO's have defined specific allocation criteria – for individuals, employees, corporate investors, others and now even insurance companies. Corporates/institutions have also been given another incentive in that they unfairly won't have to pay until they know how many Kenya Re shares have been allocated to them.

The market is still down , as I and am sure many others have traded less this year. Most activity had revolved around new share issues and recently split shares and the reduced trading has meant less income for the brokers.
Some say it is because of the falling prices or shares are still too expensive/overvalued, others says it is because of stockbroker misdeeds.

Dividend by EFT
In another move to curtail rising shareholder costs Scangroup has twice tried to entice investors to get their IPO refunds and now dividends by signing up direct bank transfers (EFT's) to get money straight into their accounts. EFT's offer faster payments, by pass risky cheques (can get lost in post office and investors have take about two weeks to get funds), but while EFT’s are free are most bank’s it’s also a sly way of passing on the cost of dealing with shareholders to shareholders themselves.

The most expensive round of beer you'll ever buy

Archer has regaled us with some great bar tales of late. So here’s a nairumor to caution/silence all those big talkers and big spenders who take one tusker and suddenly become as generous as a politician tuning a stewardess by buying rounds of drinks and sharing their million shilling investment plans and income secrets.

It is said that someone with ulterior motives will cozy up to you to listen, and maybe get a free drink for listening. Usually such a person would be a sly thief eyeing one of the three fat nokia's you've laid out on the table. Now there's another fox that’ll befriend you and ask for your business card. That person could be tax agent who'll Google (check up on) your records at the Kenya revenue Authority the next day to see how your big bar talk measures against the small income tax returns you filed at the KRA. ]]> http://bankelele.blogspot.com/2007/06/convenient-banking.html 2007-06-26T10:48:00-04:00 2007-06-26T10:48:00-04:00 making trades offs as convenient banking is not the same thing as cheap banking

Equity has been the fastest growing bank in the country over the last few years. It has won customers, now 1+ million, and has sent bigger banks banks back to the drawing board to woo & retain their customers.

However, while banking with them may not be cheap for a business, it is convenient, and offers finance and flexibility to an upcoming business. People coming from abroad complain about the cost of making mobile calls here – saying they are expensive. But compared to what? A taxi driver will make a 30 shilling mobile phone call to secure a 2,000 shilling job as his phone is his office.

Same with Equity their low entry minimums suit individuals and start ups. And while some of their charges are rather hefty (3% for ENC and 10% of amount for a temporary overdrafts), as a businesswoman told me today, their quick decision making and the fact that they are the only bank that can offer these facilities to her make them the optimal bank for now. Getting cheques cleared, guarantees, and payments to suppliers matter more to her now, than the cost of these services, and help her build a credit record for the future. Once she is more established,. she will look question the transaction costs and have other banks now wooing her business.

Other banking briefs

According to Africa confidential, Kenya is favored to be the new host country for the African development bank, with Botswana second in the ranking. However Ivory Coast is back in the running following the signing of a peace accord. More on homeless banks.

The CBR Bank rate was lowered from 10 to 8.5%

The Government has commissioned a study to look into the low uptake of youth enterprise fund and agriculture development funds. They are blaming banks for asking borrowers for collateral and 3 month bank statements – terms which were not spelt out in the funds. from an offline story from the East Africa:

CFC Stanbic bank pre –merger comparisons

Diamond Trust acquired a majority shareholding in Diamond Trust in the just concluded rights issue.

Equity Bank
- Looking to enter the money transfer business
- To buy Housing Finance bank - what do the bloggers say?

Family bank got admitted to the CBK bank clearing house earlier in June, just a few weeks after being licensed. Family took advantage and pressed for an exemption (on a two year waiting period), similar to that granted to Equity Bank when it also became a bank. from an offline story from the standard

National Bank is seeking to commit Ketan Somaia to civil jail over a 17 million debt

Pyramids schemes continue to
thrive despite numerous warnings. However, some schemes feeling a cash pinch are passing the blame to the central bank who are limiting the interest they can pay depositors to 10% p.a. - before they were paying over 10% per month. ]]> http://bankelele.blogspot.com/2007/06/kutwa-tuesday-june-26.html 2007-06-26T10:42:00-04:00 2007-06-26T10:42:00-04:00 Uchumi revealed: Shedding some lights on the Uchumi bond proposal, the receiver manager has stated that the problems that shut down Uchumi had more to do with management style than the market conditions. The newspaper says that the 650 million to be raised, 280 million will go to pay to pay suppliers & creditors, 23 million interest on (bank) loans, 52m to pay terminal benefits of staff, 200m working capital as the company plans to open 3 new branches in Mombasa, Nairobi, and Kisumu.

The article adds that all suppliers have been paid for deliveries made in the last 12 months i.e. the company is profitable. The company had sales of Kshs. 1.3 billion in the first quarter of the year and had 2.8 million shoppers visit their stores. Sarit is their best store with April revenue of 90 million followed by Ngong Rd hyper with 68m (last was Eldoret with 8m) from an offline story in the financial standard.
Note - even if they re-list, won't they be in the same boat as NBK and be unable to pay dividends for several years?

Rights Issue: Olympia’s rights issue was formally announced today with an offer for shareholders to buy 3 shares for each held.

Newspapers: New newspaper from the KISS team - called the Nairobi Star and billing itself as Kenya’s first full color daily newspaper launches next week
- But what happened to the Kenya Times website frozen on June 8?

Trade not aid
According to , an Oxfam report subsidies are responsible for poverty among African cotton farmers.

Political worm
Raila Odinga gets unfairly blamed for a lot of things, but he is not responsible for a malicious computer virus bearing his name that has caused IT admin’s some headaches this month

uh oh: Why is Obama’s campaign getting stuck?

uh oh 2: Sad to read that former track darling Marion Jones is
almost broke. Even though she wasn’t a big spender like Tyson or Jackson, legal bills fending off drug allegations have taken their toll on her finances.

Uh oh 3 & 4 : Zimbabwe to do a takeover of foreign businesses as Uganda parliamentarians have given Barclays, Sheraton, Kakira Sugar, and Uganda Telecom one year to float part of their share on the Uganda stock exchange.

War what is it good for?
Is there a difference between Somalia, Darfur and Palestine? ]]> http://bankelele.blogspot.com/2007/06/cfc-stanbic-bank.html 2007-06-23T04:35:00-04:00 2007-06-23T04:35:00-04:00
The merger makes sense in that the 9th and 10th largest banks (both around $350m in assets) can merge to become the 4th largest bank in the country (after Barclays, KCB, Stanchart)

Sticking points are that the deal is structured to include the creation of new shares (113 million) that will be transferred to Stanbic in addition to buying a majority of Gambit shares (currently the largest shareholder in CFC). Gambit will still remain as the 4th largest shareholder in the bank after the merger.

To sweeten the deal, CFC Stanbic Bank will remain listed on the NSE and Stanbic Kenya will be a wholly owned subsidiary. Also the statement points out their branch networks complement each other, so perhaps only Mombasa (where they, and most banks, have branches on Nkurmah street) and branches in Uchumi stores may need a work out.

When the story first broke last year (despite having a caution), it sent CFC's share price up 10X (to about 900 shillings) and this notice also advises shareholders to exercise caution in dealing their CFC shares until further announcements are made. The announcement was released on Friday (but not yet up on NSE site), and published in the newspapers on Saturday to perhaps dampen the speculative mood/euphoria and allow careful analysis to set in before Monday.

(I Don’t have CFC shares but they have been very good stockbrokers to me. Unrelated to this is, I have Stanbic Uganda shares) ]]> http://bankelele.blogspot.com/2007/06/national-bank-agm.html 2007-06-22T09:58:00-04:00 2007-06-22T09:58:00-04:00
some highlights

The debt and (no) dividend has dominated any discussion about NBK and following the government settlement of their debt via Kshs 20.3 billion in bonds, spread out over 15 years, there was some optimism that the shareholders would finally get their due. Their auditors (Deloitte) have raised this matter of emphasis for several years as NBK has continued to claim interest on these government initiated loans with the understanding that it was sovereign debt to be settled one day (which has now happened).

However in a long statement by the chairman (Mr. Muhindi), he mentioned that they were still not in a position to pay dividends and shareholders should not dwell on the matter. He mentioned that NBK's share price had appreciated by over 30 shillings in the past year, and to any share trader, that was more than any Kenyan company paid in dividends last year.

Unfortunately the dividend issue came up and even the first three shareholders all asked about it among the many questions they posed. The Chairman mentioned that the banking act, companies act, and NBK articles all forbade payment as long as there was a deficit in the revenue account – and that the government bond would not wipe out the deficit, only profits can do that which may not take another four years

bad debts NBK collected 503 million shillings in bad debts which was up from 403m the year before. He said they have still not scratched the surface as many of their cases were still in court.

privatization of NBK was mentioned in the budget last week; however the board does not know more than what was in the media. I.e. that GoK and NSSF would sell their shares either to the public or a strategic partner. On merger possibilities the board would consider the right merger opportunity if it came up (but not for share capital reasons)

other shareholder Q’s

corporate social responsibility NBK assisted in the famine relief program last year, set up a ward at Kenyatta hospital, assisted schools for orphans in Mombasa and is building a kitchen for Mbagathi hospital.

directors why should directors get allowance when we have no divided and some directors don’t even attend meetings?

who got paid? a small amount of dividend (174,000 shillings) was paid in 2006 and shareholders wanted to know to who! Management stated that the correct term should be dividend collected - as some shareholders still have not claimed their dividends (last paid in 1997 and amount totaling 271 million)

what is statutory reserve it is a new rule for all banks in Kenya that even for performing portfolio, 3% must be set aside to provide for any eventual bad debts.

path to dividends: Responding to the umpteenth question on dividends, the MD (Mr. Marambii) stated that there were two ways to get NBK shareholders back on the path to dividends (i) one was to accumulate profits to pay off the deficit – which could take several years or (ii) was rot approve a reduction in the banks capital which would wipe out the deficit. Going forward any profits thereafter could be applied to dividends. He said that shareholders had rejected such a move a few years before but the board was leaning towards bring the option back to the table

goodies NBK tote bag only and lunch. Some shareholders not happy said that the company could have also given a t-shirt while another suggested that they could have saved the money spent on the bags, cold lunch, and printing the annual reports (mgmt: says they cost 60/= each) and paid dividend instead. I did not stick around for lunch which looked like it was going to be a chaotic buffet ]]> http://bankelele.blogspot.com/2007/06/expensive-water.html 2007-06-22T09:45:00-04:00 2007-06-22T09:45:00-04:00
Still it is an odd paradox of life that a litre of water [which anyone can make at home] could (until recently) cost more than litre of petrol [imported from thousands of miles away and undergoes several complex processes]. ]]> http://bankelele.blogspot.com/2007/06/mostly-safaricom-ii.html 2007-06-20T07:37:00-04:00 2007-06-20T07:37:00-04:00 election year IPO. ]]> http://bankelele.blogspot.com/2007/06/mostly-safaricom.html 2007-06-19T08:08:00-04:00 2007-06-19T08:08:00-04:00 plastic paper announced in last Thursday’s budget has temporarily been reversed. It was an amorphous declaration covering all manner of plastics (consumer, industrial) that was likely to lead to unintended increase in the price of many items.

Safaricom
- Has lowered rates for phone calls and SMS from today. Mobile companies have become increasingly competitive with Celtel and Telkom Wireless - who have deployed VoIP and roaming features - nipping at the edges of Safaricom’s base. Are free weekends from Celtel the next offering?
- Safaricom has opted to recycle numbers now that they were running out of lines(prefix 0720-0729. Unused phone lines (not used/topped up) for 4 month can now be reclaimed by the company and be resold (previously they expired after 1 year)
- I’ve noticed on my recent travels in South Africa, Uganda and Tanzania – that all Vodfone affiliated networks have a cool feature that lets you know where you are (location). It was tested once in Kenya last year but the flip side to this is that it reminds paranoid people that the phone companies (and other interested authorities) know if you are at Ngurdoto mountain lodge, Johannesburg airport or the Speke hotel and that they can find you and perhaps not wanting to spook some subscribers have not activated the feature in Kenya. [Read how it affected a lion’s phone choice and more on big brother from Uganda and South Africa]
- 30% of Safaricom up for an IPO this fiscal year.

Sports TV: G TV are expected to have 80% of premiership games this year. Is that reason enough for DSTV to panic? (am not a subscriber). There’s also Oxygen (cable) TV (costs Kshs 999 per month), and free TV (Nation (with La Liga), Citizen (rename them ChelseaTV), KBC, KTN and other channels with various sports offerings. The big attraction of DSTV is sports, but also the other channels like Movies, MNET and Discovery. DSTV now assures that they will still have games of the big four (Arsenal, Chelsea, Liverpool Man U – listed alphabeticaly, not by rank)- two every Saturday, two every Sunday, and one on Monday night. So what is 80% worth if it features teams like Blackburn, Man City, Sunderland and Wigan at a cost of about Kshs 2,200 per month? ]]> http://bankelele.blogspot.com/2007/06/bank-roundup-june-07.html 2007-06-16T03:44:00-04:00 2007-06-16T03:44:00-04:00 all banks share capital raised from 250 million to 1 billion. At the beginning of the year, 25 of 43 banks were below this mark (with 7 banks below 500 million). This is an update/reversal of an older proposal to lower the share capital when some banks were struggling a few years ago. Not many mergers expected though it may prompt some mid size banks to go for a public listing to raise cash (only 3 banks lost money last year)

Central bank has advertised for some currency destruction contracts as the east African reports on talks for the government to invest in the current currency supplier DE La Rue

Diamond Trust to venture into Islamic Banking

East African Development Bank profit went up by 229% to $4.6 million – up from $1.4 million the year before. Assets increased to $262m dollars and their non-performing portfolio reduced by 11%

Equity bank won an international award – the 2007 global vision in microfinance award. Also KTN reported that the that the bank will open three women only branches in Nairobi

Two month old Family Bank is seeking a new managing director

KCB to expand into Uganda as it also wins an international award – the Africa investor for best performing stock in Africa award (shares price up 97% ) > but the company also held one of the longest dreariest AGM’s in history on Friday

National bank finally got recapitalized. NBK could receive 346 million in 2007 and 2008, a bullet payment in 2009 of 4.3 billion, 220m in 2010 and 2011 and another bullet payment of 5.2 billion in 2012. For 2013 - 2015 123m each and in 2016 a lump sum of 5.2b. 2017 to 2020 58m each and a final payment of 6 billion – for a total of Kshs. 22.48 billion ($340 million)

NIC to increase authorized share capital via a rights issue. The board approved it on June 14, but there was no mention at the AGM on May 16. This follows a Fitch Report indicating that mid-size Kenyan banks need to increase their capital

opportunities

East African breweries is accepting applications for a graduate management program. Details online and D/L is 22/6

Family bank: chief executive officer, credit manager. Apply through deloitte - esd@deloitte.co.ke by 29/6

Kenital solar : sales & marketing manager, technical manager, engineer sales executives (5) regional managers (4). Apply to cm@kenital.com by 22/6

Country manager at Steadman Tanzania . Apply to janis@steadman-group.com by 22/6

A dozen IT, research and engineering jobs at Safaricom

Writers at a new Swahili newspaper. Apply to gazetijipya@gmail.com

Project management specialist at USAID.apply to hrnaiorobi@usaid.gov

Rhodes scholarships: 2 for Kenyans to pursue full time post graduate study at the University of Oxford. Apply to rhodeskec@wananchi.com by 15/9

Real estate: for the monied in the Diaspora, those who have worked hard and are looking to return in style, consider investing in Kihingo village a gated community development in Kitusuru where prices start at $500,000. ]]> http://bankelele.blogspot.com/2007/06/2007-budget-to-z.html 2007-06-14T10:21:00-04:00 2007-06-14T10:21:00-04:00
Some measure mentioned in the budget speech today (only heard 1/2 of it) include:

alcoholduty up on spirits, wine and some beer
auto spares Reduce import duty 25 to 10% for oil filter, but with increased excise duty on imported used spares
Banks minimum share capital increased from 250 million to 1 billion (over the next 3 years) and benchmarks will be set up to be adhered to
battery to protect local battery companies, a duty imposed on imported recycled batteries
Cigarettes tax up
east African investors get the same treatment as Kenyans, - i.e. withholding tax of 5% on dividends and improved allocation chances (will be treated same as Kenyan in pool expanded form 25 to 40%)
energy rural electrification to be continued as mini grids will be set up in large towns. 8 billion has been allocated to deal with (anticipated?) energy shortages so they don’t hamper manufacturing processes and the government will also complete the oil pipeline to Uganda and refurbish the refinery at Mombasa (even though other shareholders have refused to chip in)
Educationincreased funding for free secondary education, implement increased teacher salary agreement and hire 7,000 new teachers
hawkers 400m to be spent to construct a market for them in Nairobi
ICT 1 billion ($15 million) for TEAMS which is expected to be completed in mid-2008. Also a national fibre optic network will be in place to reduce the cost of communications. In addition a 200m ($3m) endowment fund for innovation and research will be set up and the private sector invited to top it up.
insurance companies minimum share capital raised. For Long term (50m to 150m), general (100m to 300m) and composite from (150m to 450m) – within 3 years.
leasing: Zero rate leasing of some equipment and removal of withholding tax requirement
licenses for businesses - eliminate 205, reform 371 others
Medical equipment duty removed
milkZero rate milk powder to promote local processing and value addition
mineral water tax imposed
police 25,000 new officers to be hired
plastic bags tax imposed while thin plastic bags are banned to improve the environment.
Privatization 36.1b shillings ($0.5 billion) expected from privatization: Telkom Kenya (get a strategic partner this month), Safaricom IPO on the NSE, more shares sold of Kengen (when price corrects) and National bank [these shares could be offloaded to 3rd parties and not through the exchange]
Pyrethrumextracts are zero rated to promote local insecticide production
real estate duty exemption for developed of low cost housing (but not in slums). Also pension savings can now be used as security for home loans (not just as down payment)
retirees monthly pension benefits will be exempt from tax. Also social security will accept voluntary contributions from those whose employers don’t take part
sugar development levy removed from imported industrial sugar
textiles removed import duty
trade import duty reduced from 2.75% to 2.25% for all goods from all outside east Africa and none from within east Africa
transportation removed TLB from non passenger commercial vehicles,
Tourism 2 million visitors expected this year and as benefited the local air and hotel sectors. Will develop eco and lake tourism and will create resorts in Mombasa, Turkana and Isiolo.
universities (private) duty removed on goods and services supplied to them
VAT refunds to speed up refunds (which business community has complained about), will become automatic for those companies with a proven track record
women a 2 billion shilling ($30 million) women enterprise fund to be set up – starting with 1 billion this coming year, and call on corporates to assist the fund.
youth fund allocation increase by 250m to 1.25 billion with a goal of taking it to 2 billion ]]>