Scangroup Sellout Part II

Missing the Kenya Airways Party

Crown Restored

Stolen Crown

Olympia turnaround?

Drowning in Safaricom juice

8-8-08 is supposed to be a good luck date or something. 2008 has been a rough year for most companies since January. The Safaricom IPO was supposed to be the savior for investors, but has instead become an albatross on the Nairobi Stock Exchange

Heres’ my portfolio that has changed May 2008

The stable
Diamond Trust ↓
KCB ↓
Scangroup ↓
Stanbic (UG)↔
Safaricom ↓

What’s changed?
In: Safaricom
Out: Express, Sameer, Total
Increase: KCB, Safaricom
Decrease: --
Dividends Paid: KCB, Stanbic, Diamond Trust, Total, Scangroup
Unexpected gains (none) /loses everything else
Outlook: Shifted focus to banking and communications, and got out of manufacturing related stocks as the political and oil shocks continue to be felt through the economy. No foreseeable changes till next quarter, but will look at Kenya Airways if it dips lower.

Old Mutual Loosens Up Part II (Corrected, thanks Joyce)

A few years ago Old Mutual unit trusts in Kenya had a minimum entry amount of Kshs. 500,000 ($7,462). Last September, they dropped this to Kshs. 200,000 and now they have gone even lower.

Old Mutual Kenya has launched the Toboa Investment Plan which costs just Kshs. 7,500 ($112) per month to start other funds in the family are money market and balanced fund. Speakers at the launch included Deputy Prime Minister Musalia Mudavadi, NSE CEO Chris Mwebesa, CMA CEO Stella Kilonzo, the new boss of Old Mutual Kenya, and Laura Chakava head of Old Mutual Assets in Kenya – who all spoke of the need for affordable collective investment schemes in the country

- Mudavadi said that while local government act mandated that the town councils should have savings and capital funds to cater for unexpected expenses, these are largely ignored – with only 40 of the 175 councils able to comfortably pay their salaries. Also high savings are a part of Vision 2030, but Kenyan savings rates which were already below the average of other African countries, were dropping
- Mwebesa lamented the 1.5 to 1.8 million CDS account holders in the country; the number is un-serviceable (mailing budget for statements of the CDSC costs almost $1m per year – and this compared unfavorably to account holder level in South Africa (100,000) and Brazil (500,000). He said more people should access the market through collective investment schemes such as unit trusts but whose entry levels had been high (elitist) until now
- Kilonzo and Mwebesa both alluded to a recent survey on investors (June 2008) that showed the level of investor education in teh country was not good. Most people relied on the media for share investment information, and were ignorant of the risks of investing in shares.
- Chakava said Kenyans have appetite for investment as shown in the IPO queues and pyramid schemes. OM now gives them an affordable, professionally managed vehicle for investment beyond the unpredictable buy low, sell high mantra that most investors try and follow.

Toboa will invest in fixed income, equities and off shore. OM, which pioneered unit trusts in Kenya, manages about Kshs. 10 billion, but CIS only control about 2% of the NSE. Other OM trusts have an initial fee of about 3 – 7% and annual fee of 2%, the Toboa will probably be slightly higher than this and will use Posta (post office) outlets to collect payments.

Edit: Interesting discussion on Old Mutual investment plans from the Stockskenya forum

I have just finished the morning at the stockbrokers, processing my KCB rights:

First thing I did when I got there, was to talk to the askari (guard) Why – rule of queues - there was a queue outside the office, which many people join blindly, and waste an hour. The queue was for Safaricom refunds – and if you’re doing KCB or other transactions, you get admission upstairs.

At the entrance, there’s a ticker paper machine - and you get a number which will be called upstairs for you to get served. So at 9:10, I got number 436 and proceeded upstairs to sit with about fifty other shareholders all waiting for service.

There were five desks where customers were being served, and as each broker representative finished with a customer he/she pings a message, which called up the next sequential on an electronic notice board e.g. 437 go to counter 6, then 438 to counter 3.

It’s a first come first served system, easy to understand to anyone trading shares, is fair, and works. The alternative would be for us to form a long queue, perhaps all the way outside the building, but this one allows investors to sit and wait for their turn. Over the next hour, this went on well. The queues are slow, but what else can be done?

I was sitting there, reading the newspapers, when I notice one of the counters. The officer there did not ping for the next customer. He served whoever slid into the chair in front of him. He served an old man, with an assistant (probably grand daughter), then an old woman who just walked in. Then the person who was in the seat next to mine, went and got served, followed by the person who took the seat next to me.

The brokers were totally ignoring the numbering system that had kept us in an orderly state for the last hour. By 10:20 when I get served, and was able to apply for my share rights (taking two minutes), he had, by my count served seven people who did not present numbers.

I wanted to lean over and ask him why she is violating the system he is paid to serve, but didn’t and I left as soon as I was done. There are so many questions I should have asked him;
- Am I at fault for focusing on him, when 4 other counters worked well for the stockbroker serving dozens of investors?
- Am I at fault for not asking him why he did not follow procedures? Like many other Nairobians, simply bury my head in the sand and ignore the wrongs around me
- Am I a fool for not taking advantage of the opportunity, and ignoring my number (hierarchy/position in the society)?
- Is his boss at fault or his colleagues for not noticing this? I saw some of them shoo away customers, asking them to wait their turn
- Are the customers at fault for taking advantage? What he was doing is obvious to many observers in the room, and some customers change sits to be near his desk, ready to leap into the visitors chair as soon as it is vacant. Enjoy the ride is the mantra of our matatu culture. In our culture of poor customer service, employees are taught to assist all customers, and that only those customers who are brash or loud get served, while the meek and quiet will spend the whole day there. But this institution has set up an (expensive) system for orderly customer service, to serve them better (unlike others), but which was all being undermined by one of the staff
- Or is this all a misunderstanding - and was his ping machine/signal broken or defective - [like so many facilities in our society - traffic light, road signs - leading to an inability to communicate the rules?]

As I walk out and read notices on the walls, the queue is now longer than before with more patient investors even standing on the staircase.

Here we go again The Indian Ocean Newsletter reports

Just a few months after the collapse of the Nyaga Stock Broker , a large company heavily indebted to its clients, another stockbroker on the Nairobi Stock Exchange (NSE) is in turn facing financial problems

Did the unintended collaboration of Coldtusker / Business Daily unearth the firm? This comes after several recent articles in the Business Daily on the renewal of broker licenses by the Capital Markets Authority.

Plastic cheaper: KCB lowering their credit cards fees. Annual fees for the KCB card will now be was 3,000 (~$47) from 4,000, while their Visa Gold will now be 4,000 (~63) from 6,000. Card penetration remain lows, I believe Barclays are the biggest company with 81,024 cards in 2007 (double 41,019 in 2006)

Entry-level opportunities (and expiry dates)
most from the daily papers last week
- Graduate trainees at the East African Portland Cement company (15/7)
- Management trainees at Unilever Kenya (7/7)
- Management trainees at Telkom Kenya (7/7)
- Young processionals program at the World Bank (15/7)

Safariom Day 16: Deals 3,939 Turnover 270.8 million shillings [$4.23 million] Avgerage 7.44 Closing 7.40 [+ 2.07%] High 7.55 Low 7.30 Last 7.45 Volume 36.4 million shares. Commentary: A constructive session. Bouts of indigestion are to be expected but those who had to flip [over leverage] have done so by now, given the volumes we have witnessed since the IPO. [Commentary and data provided by Rich.co.ke - Nairobi Stock Exchange Authorized Data Vendor]

Diamond Trust 2008 AGM

Share Portfolio: May 2008

Wanted NSE II

Wanted

CMA gets teeth

New media stocks at the NSE

CMA 2008 Licensees

IPO Train: full on board

A somewhat irresponsible article in the wake of the collapse of Nyaga Stockbrokers last week – fingers four more brokers that the (now awake) regulator has issues with. An article of this magnitude about a bank could cause a run on deposits or worse.

But the firms - Solid Securities, Reliable, Crossfield and Discount Securities appear not to have been affected, and a causal visit to their offices shows they are are devoid of crowds of panicked investors as seen on TV last week. These are not ‘rogue’ brokers robbing their clients, just some brokers who have other regulatory issues to sort out.

March 5 2008 marked the end of the 2nd 6 month statutory management period for after the collapse of Francis Thuo stockbrokers. It also came to mark the beginning of a 6th month statutory management period for another stockbroker - Nyaga Stockbrokers which was a much larger operation than the former.

In the collapse of the second stockbroker, there is a failure to learn from the mistakes of the former, and also myopia in regulation and awareness.

The CMA and NSE continue to treat Nyaga and FT stockbrokers like a rogue computer that has gone amok and chewed up stockbrokers funds. It was not - it had directors, managers, and employees. Who are these people? We have not heard any names or their stories, explanations, their questioning/arrest/convictions/disbarment's/fines etc.

It’s a trend we have here: looking at all the recent financial scandals we have had Charterhouse, Invesco, Francis Thuo, Euro Bank, and even the Electoral Commission of Kenya (bad math in 2007) - an organization is condemned (after it collapses), a beautiful report is written (and filed away), while the principals/employees walk away scot free.

From the big scandals of the past, over 40 bank collapses in the 1990’s, including giants Trade and Trust Bank’s not many lessons have been learnt. We have a culture that does not allow us to learn from the past, and dooms us to repeat those mistakes in future. It was only with Goldenberg (and to a lesser extent Anglo Leasing) where after the principals and officers were called forward to explain their odd (& previously secret) actions that some level of truth came out. That should be a model for dealing with other and future scandals; public hearings, not behind boardroom doors, and public reports, which will make it easier for anti-corruption prosecutors.

It is a dark secret in banking that very few employees are ever convicted of financial crimes and scams at their place of employment. What happens to these bank and stockbrokers employees, and where are they now? I don’t want them to move to CFC, but chances are they will get jobs with other brokers and bankers. They will lie low, but it's only a matter of time before the easy money trap sets in again; if they have amassed enough, they may even dabble in politics, or go for MBA’s...

There, I hope they encounter business classes looking at the past scandals, case studies on Goldenberg, Trade, Trust, Prudential Building Society, the genesis of Consolidated Bank, and the collapse of stockbrokers in 2007/08. Etc. Otherwise such events will recur in 2009 and 2010.

But some things can’t be fixed, and one Kenyan bank will collapse about every other year, a trend that is likely to continue as the industry continues to absorb the shocks of the post election period.

Other timely reading
- Are the shocks over? Coldtusker hints at other brokers
- Riba Capital’s infamous rogue broker alters from October 06 and April 2007, the second of which had Nyaga brokers at the top of the list
- Nyaga Stock Brokers
Nyaga Stockbrokers has received a warning from Capital Markets Authority in regard to their issuing of Bouncing cheques something similar to what Francis Thuo and Partners did.

This broker has been struggling for several months to clean up its act to avoid being suspended but the problems have been running deeper with the MD claiming that the only bouncing cheques they issued were those of Eveready IPO refund a claim which Eveready refutes and which other stockbrokers disagree with.

There are reports also that this broker was involved in illegal ‘shorting of the market’ whereby they would sell clients shares without authority on a market peak and buy back on a market slump. The CMA is said to have summoned the broker 2 weeks ago and given them an ultimatum to clean up something which the NSE had raised much earlier. If this does not happen, then we could see another broker going down due to money trouble.

- How to change your broker

Shareholder woes: My first AGM this year is that of ICDCI which was held on Thursday February 21 at the Safari Park Hotel.

Sometimes it’s painful to be shareholder and today was one of those days. I’m out of practice and forgot to check in early – and arrived at the Hotel at 11.m. sharp only to find a very long queue outside. It would have been better to be a proxy today as that queue moved faster. But the company had only four computer stations to register any of its 40,000 shareholders who showed up – and I didn’t get processed till noon after spending an hour standing in the hot sun.

The meeting was almost over and I was able to catch a few comments by the MD and the Chairman of the company:

- On property: they sold two buildings in Nairobi, but are going to invest in the real estate sector again – and develop a building on a plot in downtown Nairobi
- On Eveready: it has not performed well (for shareholders) but by going public they are now able to liquidate part of their shareholding
- On Rift Valley Railways – its long term investment, but they hope to get return on the investment within 4 years
- On company’s sustainability in these tough political times- aim to diversify regionally, to minimize country specific risk
- one shareholder complained about late delivery of the meeting invitations & company accounts (through the post office) and the Chairman answered that they are concerned about the cost of printing and distribution of the company accounts – they may print abridged ones in future and e-mail others or put them on their web site

Hot Button issue was the proposed name change of the company from ICDCI to Centum Investments: almost all shareholders who spoke, on the matter opposed the name change of the company – some saying old is gold, new name is not African and can’t be translated, they don’t want to lose identity etc.

The Company Chairman was at pains to explain when one director Mrs. Pauline Muriuki stood up and exhorted shareholders to approve the name change. She said the company wanted to differentiate itself from (former parent) ICDC, and also Uchumi and the Government – saying negative stories/Matope that involved these companies affect the ICDCI share price. She also mentioned that the shares allow the company to go international (will be listed on the Uganda Stock Exchange. She said other companies had changed their names to reflect their new identities and had succeeded thereafter such as Unilever.

She was clearly worried as the company had already put in place a multi-million campaign for the new name which was yet to be revealed (a launch dinner to be held today but unfortunately coincided with the launch of CNBC Africa in Nairobi and was canceled) - also the company had already printed out shirts and gift items for shareholders with Centum to take home after the meeting

Is there shareholder democracy? : The Centum matter was eventually put to a vote on the floor, and passed, but the Chairman failed to ask if there were any opposers to the name change. The matter should actually have been put to a vote (with physical ballots). But would it have mattered anyway (since directors - businessman Chris Kirubi and ICDC (23%) combined own 50% of the company’s votes). Still it was a warning that companies should not take shareholders votes for granted

Goodies: Centum branded polo-shirt, tote bag and calendar. The Hotel had prepared a buffet lunch that was bland, and the company may have been better off handing out packed lunch boxes as the shareholders were unruly as they queued for the gifts and food

– Cement index: There was a Nation story today about new faces and other giant killers who knocked out several prominent members of parliament in party nominations last month. However some signs were on the wall for non-performing MP's; cement industry people could tell which MP’s are likely to survive/be thrown out on election day (December 27) based on how much cement a constituency CDF has bought – an indicator of how development minded an MP has been over the last five years.

– Nairobi City had been transformed hawkers everywhere, undoing all John Gakuo’s hard work. One group I’d not mind seeing are the fruit vendors at a time when Uchumi is selling imported tangerines at 350 shillings ($5.50) per kilo and oranges at 160 per kilo from South Africa.

– Pesa Point should relocate their kileleshwa ATM from the Kasusku center where it is not accessible after 6:30 PM – to the police station across the street where it is equally safe, but can be accessed 24/7 like all other pesa point ATM's.

– A stockbrokers office is up to no good again - messing around with clients funds & shares, and making unauthorized sales without informing investors. Diligent investors who discover the anomalies are told they are ‘errors‘ which will be corrected.

– Exam markers for KCPE essays say they can tell the difference between academy and public schools students - The differnce in quality is so stark with academy kids way ahead.

– It seems pretty woman liaisons that start on the beaches of Mombasa now end with afternoon shopping trips at Nakumatt Nyali for groceries.

- Local pubs watch out most Nairobi butcheries are are shortchanging buyers of roast meat. I always knew it - but how can you prove it without looking cheap? If you argue before cooking, your order is going to be messed up, but if you wait to complain after you see the roast meat on the table, you’re too hungry to refuse what's on offer.


Business briefs
– Allahabad Bank (of India) is looking to acquire a small to mid-sized bank in Kenya or Tanzania.

– Cooperative Insurance Company has extended its private placement from November 23 to December 31. The placement needs more publicity as every new investment officering this year has been over subscribed - from bank rights, to new bonds and IPO’s

– Standard investment bank partnered with the National bank of Kenya to offer stockbroking services through NBKL branches. Are insurance companies watching this – how their stockbroking siblings are using banks to penetrate into rural Kenya?

– The World Bank will seek to mobilize the African Diaspora towards partnerships to develop the continent. More than 1/3 of Africa’s highly qualified human resources are presently in the Diaspora and most are unlikely to return to the continent, but do remit $4-6 billion per year and a significant number of professionals from the continent are cu. One of the proposals is for the WB to work with the African Union to create a Diaspora Remittances Investment Fund.

- The Cheetah index business site has been launched by African Path

– Nakumatt Kisumu is now open 24 hours daily

- Safaricom and EABL had better hurry up with their Christmas promotion competitions

Local media

- Along comes K24, Kenya’s first 25 hour new channel. According to the People newspaper it is backed by Regional Reach mogul Rose Kimotho and it will use Kenya Broadcasting Corporation (KBC) to distribute its signal as part of a private/public partnership. K24 will also see the reemergence of Jeff Koinange last at CNN and other local media exiles.

Morning shows have been American broadcast network cash cows for years – and now they have come to Kenya. NTV started it off with NTV this morning which has been running for about two months, and last week Citizen started their own called power breakfast. They have to generate more content to fill up the 3 hours.

- Needs content; I was initially a fan and fell for the beautiful scenery of NTV’s Cobra Squad but now can’t stand the monotony and repetition - (5 min) car chase, cop blunders (5 min) foot chase, twist in story, (5 min) car chase, gun fight, (5 min) car chase.......

I have always been an advocate for more stockbrokers in the country especially to served in the rural areas.

But, as narrated in real lean times, there is a serious shortage of investors, not brokers.

This is because most Kenyan shareholders are buy and hold investors not active traders or speculators. This seen where companies with huge numbers of shareholders have relatively small numbers of CDS accounts (many of which are ghost companies created to increase IPO allocations).

So for those stockbrokers such as Discount Securities and CFC who have built nationwide branches, the volumes of investors and trades at theses offices are relatively low. – As a trip to the Mombasa and Nairobi offices of these brokers showed quick services, sparse halls and low activity. Such places only become strained before and after IPO’s but otherwise return to a slow pace.

So who should bridge the gap – productively and profitably? Stock agents, and stockbrokers through partnerships (such as CFC through Postal Corporation), Suntra (through Postbank) and Ngenye Kariuki (through K-Rep bank) to handle the everyday action, but not by stockbrokers opening up nationwide branches.

Next time you see a crowds around the block will be the Safaricom IPO in December.

Other Thursday briefs’

NSE:
- Speaking of Safaricom, there was a story in the Wall Street Journal focusing on if it the $500 million IPO will be accessible to foreign investors. A co-listing in London is possible using GDR’s
- Best wishes to NSE Chairman Jimnah Mbaru who will be contesting the Starehe parliamentary seat and stockbroker Ngenye Kariuki in Kiharu.

Banking:
- The government will sell 2/3 of the 90% shareholding in Development Bank of Kenya.
- K-rep to raise 500 million through a bond
- Islamic banking spreads as both K-Rep (Halat) and National Bank (Al Mumin) add Shariah complaint banking products

Real estate:
- Is the property boom over? Apartments are going vacant while office spaces are full, and what impact will that have on banks holding mortgages and real estate investment portfolios? Hat tip Kamau
- Tororo cement of Uganda will construct a cement factory in Kitengela
- The Ministry of housing to construct 526 houses for civil servants in Ngara phase II

Awards & events:
- East Africa's most respected company crowned this weekend in Tanzania
- Bank awards by Thinkbusiness.co.ke to be awarded on 5th December
- Strathmore University hosts a microfinance seminar starting November 23
- An ICT outsourcing expo is being held at the safari park hotel from November 27.
Opportunities:
- Equity Bank: business growth & development managers, credit managers, archives & record manager. Details online. D/L is 30/11
- Ernst & young: managing director E&Y advisory services ltd (EYAS) details online. D/L is 7/12
- ICPAK: business & professional development officer. Apply to icpak@icpak.com by 30/11
- KTN TV onscreen positions - full & part time. Apply to screen@eastandard.net by 23/11
- KTDA; General manager trading, head of strategy & planning, Network administrator, treasury & trade finance officer, marketing executive. Apply to recruitment@ktdateas.com by 26/11

Pressure is on for banks to raise capital and Diamond Trust are back to ask their shareholders to chip in. In November 2006 they raised 735 million, and this time they are set to raise 1.6 billion ($24 million)

What has changed
Then ; Now
Nov ’06 ; Nov ‘07
New shares 15.5 million ; 23.3 million
Price 50/= ; 70/= (a 20% discount each time)
Ratio 1:8 ; 1:6 (1 new share for 6 owned)
Result: oversubscribed; ? (Likely to be the same)

cost of the offer
Budget:2006 offer - 41.6 million ; 2007 offer - 54.7 million

What costs more: :
Advertising - up 250% (2.5m)
CMA approval – up 104% (4m)
Placing commission – up 100% (24.5m)
Printing & postage - up 29% (9m)
Registrar & data - up 29% (3m)
Legal fees – up 16% (4m)

Costs less
NSE listing fees – down 436% (0.09m)
Reporting accountant fees – down 200% (2m)
Sponsoring stockbroker fee – down 50% (1.74m)

Unchanged
NSE listing fees (0.5m), PR activities (0.5m)

calendar
record date 16/10, rights start trading 2/11, last day trade rights 12/11, last date to pay for rights 27/11, new share trade 11/12, new share certificates 18/12.

Once, long ago, I wrote a paper about a business case to put up a cyber café in an airport terminal – for transit passengers to browse there as they waited for the flight to connect. That model is in place today in airports all over the world (not my doing) but its’ time may already have passed with wi-fi zones and wireless laptops whose users don’t need to use cyber cafe facilities anymore.

But even cyber cafes’ that are in town may be under threat.

Until three months ago I’d spend about an hour in a cyber cafe each Saturday and Sunday. I’d go there to my check my-email and then browse quite a bit when I was done.

But all that has stopped as I now check my email and browse for information I need to know instantly – from hotmail, gmail, sports scores, stock prices - using a plain old phone (not bambanet, or blackberry) as the Safaricom EDGE service is available on most of their phones even some of the cheaper ones. I get the information wherever I am and don't have to visit a cyber cafe unless it's to print a document or download a PDF report.

Oil slick
The sale of Somken petrol stations to the National Oil Corporation of Kenya (NOCK) has been put on hold ever since the previous NOCK MD resigned from the company. Haggles remain over the high price bid for the stations.

BAT smoke-out
BAT Ghana has voluntarily de-listed from the Ghana Stock Exchange.

Does that portend anything for BAT Kenya one of the blue chip stocks on the Nairobi stock exchange and one of the highest paying dividend stocks? Cigarette smokers have had their smoking freedom curtailed in Nairobi and other urban areas (Nairobi city has less than a half dozen outdoor smoking points) making them clandestine smokers who hide on staircases and bathrooms (but at least most bars retain a smoking section). What impact will that have on sales?

BAT Kenya manufactures cigarettes here and exports a significant amount to other regional countries (who have not curtailed smoking) which should cushion it slightly from the new laws.

Stockbroker still frozen
The statutory management of Francis Thuo stockbrokers (by the Nairobi Stock Exchange) has been extended for another six months.

the pyramids that collapsed
Much has changed in the one year since nyramid schemes were highlighted here. Since then they have come under increasing pressure from the government, SACCO’s and most important the banks who frozen account necessary for their operations (and who probably still hold the schemes ‘missing billions’ that investors are crying for).

The latest collapse was Amity and it was preceded by Sasanet investment co-op (suspended operations), Spell investments (suspended operations), Circuit investments (suspended operations), CLIP (suspended operations), DECI (suspended operations), and the Kenya business community savings & credit society (Kenya akiba) (suspended operations)

Kenya news on Youtube
Some people say they are tired of political news, while others can’t get enough of it. But the Nation Media Group has gone ahead and made their new clips available on Youtube

Pesa point wins
Two yard ago Pesapoint was launched and it began a battle with Kenswitch - another network of banks sharing ATM facilities. But today Pesa Point has signed up most mid-size banks and have a network of almost 200 ATM machines – and last month added corporate banking giant Standard Chartered to their network.

The Capital Markets Authority (CMA) seeks to extend the statutory management of Francis Thuo stockbrokers stockbrokers (by the Nairobi Stock Exchange) for another 6 months (this is due to expire on September 6)

Are we ready for Basel II
Diamond cash again?: 1 ½ years ago the bank raised 735 million shillings, and now they're back for more cash as are NIC also with a rights issue (and bonus share). These fast growing mid-size banks want to comply with Basel II by 2010 which requires that they have adequate capital to cover not just credit risks, but also market and operational risks

Mumias glazing: Mumias dressed up some bad news glazed over reduced sales (-10%), profit (-9%), and cash with the promise of a dividend and a 2 bonus shares for each held – which apparently worked as the share closed 8% up on the previous week. . Still even the Business Daily was moved to decry insider trading in Mumias and EABL shares this past week

Opportunities

Road audits: from the Kenya Roads Board for engineering firms to team with financial audit firms to audit road construction work on behalf of the government by performing technical, performance and financial audits. D/l is 24/9

Strathmore finance seminar: on Friday September 7 at the Hilton on Kenya as an emerging capital market

Jobs

Celtel: revenue assurance & fraud manager, treasury & tax manager. D/l is 7/9

Director of information & public communications of the government of Kenya. details here and d/l is 7/9

Marketing managers (3) [branding, core network, wireless] at Huawei: apply to Kenya@Huawei.com by 14/9

Editorial staff at the Nation media group: they are looking for website editors, owners of popular blogs in east Africa, sub editor with niche publications - in their 20''s and 30's. apply for positions by picking any story in the nation or east African, rewrite it and send it back to editstaff@nation.co.ke by 10/9

Popote wireless: head of sales, IT account manager, sales engineers. Apply to hr@popotewireless.co.ke 14/9

Safaricom: principal credit controller, retail center agent, sales analyst, senior marketing & planning analyst. D/l is 7/9

Governance advisor - Kenya for the World Bank - d/l is 13/9

We are almost at the end of the month of August which Kenyans consider to be jinxed. So far national tragedies have included the annual floods in Budalangi and a village in Kakamega that was destroyed in mud slides, while Nairobi has had the occasional tremors continue since July.

Anyway;

lessons learnt from FT? The statutory manager of Francis Thuo Stockbrokers will begin paying off its clients (who had filed loss claims) from Monday 27th to September 7 – using money paid by new stockbroker Renaissance Capital.

This should not be the end of Francis Thuo and a comprehensive report and sanctions of the company's management needs to happen. More so because, illegal selling of shares by brokers without permission of some unfortunate shareholders is still going on. Francis Thuo was not a robot selling shares. It had managers and staff who wilfully robbed shareholders of their investment. Has no investor reported to KACC reported them to KACA (even anonymously)? What’s more shocking is that the NSE wants to reward/gift the collapsed stockbroker with more money!

Kenya Reaffirms the IPO dreams of investors by almost doubling to in price on Day 1 after the IPO. The share price reached 18 shillings before settling at 15 – but the allocation to retail investors was measly 12%

Nairobi Wifi II
One drawback to finding a great hotspot is that you have to lug around a $500 laptop to/from parked cars in an anonymous bag – which you then wrap around your chair leg so it does not disappear. But an even worse situation is to arrive there and find that for some reason the network is offline and they can’t fix it till the next day.

Still it’s better than paying $11 an hour for internet access at a hotel, which is even more expensive than before. Ultimately the goal is to have home internet access which is a whole other story.

Here’s Safaricom ISP - in form of their new Bamba net service. It’s a plug & play USB modem which costs 6,000 shillings to connect and 2,000 ($28) per month for unlimited net usage up to 700MB then 10 per MB thereafter – and is available throughout Kenya

Parliament to scrutinize privatization: the Finance Minister has been ordered to gazette a privatization law passed by parliament. This will bring such measure under scrutiny of parliament like the Safaricom IPO, and (witchin the banking sector) - moves to privatize Consolidated and National bank, or anytime the NSSF wants to divest in shares.

KCB back to UK
KCB to reopen London branch to serve Kenyans living abroad.
http://mjengakenya.blogspot.com/2007/08/kcb-back-in-london.html

KQ soars as Uchumi shrinks
Kenya Airways was ranked 99 among world airlines in terms of operations. And in the first quarter (April to June), the company results showed that with increased capacity (deployment of larger aircraft), they were able to carry 640,128 passengers (9% higher than 2006), but aircraft were less full owing to increased competition.

Meanwhile Uchumi has withdrawn franchise rights to Tesco who have closed their Uchumi branded branches (including the one at railways). from a KTN report

Recent grads can't be MP's.
Beacaus the higher education loans board (HELB) wants them to clear their loan dues before they can run for public office including Parliament.

Jobs on Offer
most from the daily papers last week

Anti-illicit trade intelligence analyst at British American Tobacco. D/L is 7/9

Central bank of Kenya: head of procurement, senior economist(s), manager forex bureaus, financial analyst, lawyer(s), executive director – Kenya school of monetary studies. Apply to the director of HR P O Box 60000-00200 Nairobi by 6/9

Constituency development fund: account managers for 41 constituencies including Makadara, Kamukunji, Starehe, Kasarani, Embakasi, Langata, Likoni, Mvita, Limuru, and Eldoret south . women encouraged to apply and the deadline for applications to cdf@wananchi.com is 21/9

East African Breweries: Buyer, Group Head compliance, indirect tax manager, group tax manager, direct tax manager, finance director, head of supply finance (Uganda) business performance implementation manager financial accountant(inter comp account), head of group procurement, procurement controller cost accountant advertising & promotion analyst service delivery manager

Principal legal officer at the east African development bank. d/l is 7/9

Branch managers at Family Bank. d/l is 5/9

HLB ashvir : audit manager, audit seniors (Mombasa). Apply to audit@hlbashvir.com by7/9

Private sector development specialist at the IFC. d/l is 10/9

Kenya airports authority: auditor operations, auditor finance, auditor information systems. Apply through Hawkins associates

Kenya commercial bank: manager in non-electronic fraud, and investigator - forensic services. Apply to recruitment@kcb.co.ke by 7/9

Macroeconomic and financial management institute of eastern and southern Africa (Zimbabwe): director debt management program, program officer – external markets & financial markets development, program officer – financial sector supervision. Apply to capacity@mefmi.org.

Chief executive officer at the Privatization Commission of Kenya to be created. apply through Deloitte at esd@deloitte.co.ke by 6/9

Website editor/content coordinator at UNDP Somalia (Westlands office). Apply to registry.so@undp.org by 7/9

Fractions of Kenya Re
It appears retail investors will get about 12% of the share that they applied for – leaving a minimum refund of about almost Kshs 17,000 (of the Kshs 19,000) that they applied for. So on to step two of my plan my plan and wait for the shares to open within a reasonable mark up of their IPO price. This is also a reminder to do the same in case of a Safaricom IPO unless they offer a trillion shares

Salvation for investors
So customers of Francis Thuo will get paid from the windfall ($3.5 million) payment by new stockbroker Renaissance Capital. But this should in no way let other brokers and authorities off the hook as they had promised a comprehensive report on what went wrong at the company. And if no NSE investor has lost money since 1954, where are my Uchumi shares?

KCB elite
KCB launches Advantage banking, joining Barclays (with Prestige) and Standard Chartered (with Diva) as offering exclusive banking services for their high net worth customers.

Safaricom is not elite, but...
(i) It’s new in a million shilling promotion cuts of buyers of their low denomination Bamba 50 (50 shilling) airtime cards
(ii) Its EDGE service (internet access) has not been working for moist of this month.

For the first time in many years, I'm likely to miss the Kenya Airways (KQ) Annual General meeting to be held later this month – as I sold all my shares earlier this year.

It's a shame because attending one was inspiration for this site and the company's AGM's have been among the most colorful to attend.

From backroom drama played out before the public, to who’s whos' appealing for votes to join the board - next to activists, to inane questions, KQ has had it all.

KQ has always had a large customer base and so has had to tweak their AGM model each year for improvement – and that has served as a model for all the recent (over-subscribed) IPO companies like Kengen, Scangroup, Eveready and now Kenya Re to emulate.

This year KQ has moved from Bomas of Kenya which seemed to be a natural home for the event with it’s ample parking, large screening area far from venue where KQ would hand out packed lunch boxes and t-shirt at entrance (some shareholders would turn back at that point having achieved their target for the day), large auditorium (where some would eat right away), huge TV screen and even had a second spillover hall for other shareholders if the main hall got full. This year's will be at Kasarani gym (not stadium)

Anyway in the buildup to the event, what is the company saying?

- It carried 2.6 million passengers last year, but profits were down 15% due to increased competition and reduced aircraft utilization
- Turnover was up in all four geographic segments (Kenya, Africa, Mid East & Asia, Europe), but operating profit down slightly on all four (also they canceled Turkey route last week). 69% growth in Asia, 17% in Africa
- Aeropolitics; They are appealing to the government of Kenya to grant visas denied to West African country nationals – warning that those countries could retaliate in granting KQ routes, or those passengers may choose other more hospitable airline/countries.
- Double taxation: They are also lamenting that they are paying income tax in most African and Asian (except china) countries – while they also have to pay income tax in Kenya (Other airlines were able to force Uganda to stop this taxation last month)
- KQ has 4,154 employees and all jobs will be applied for online from this year
- Buy & hold shareholders: of the company's 73,000 shareholders, only 23,000 (32%) have immobilized their shares (enabling them to trade).

Appeal for writers
Any reader here, going for the event can please send in a report? Here are other (2005, 2006) KQ AGM reports to prepare with.

Other happenings

- Free newspapers: According to the NYPost, the New York Times is going to end its Times Select (subscription only) model for it's star columnists/Op-Ed pages. And when you combine that with Rupert Murdoch’s plan to make WSJ site free, what does that portend for other subscription based online newspapers and sites?

Saving our roads: The government is cracking down to
remove overloaded lorries from the roads by reducing axle sizes from four to three (or requiring the last axles on a trailer to also be a steering one). The move will effectively limit cargo capacity to fewer than 30 tones, down from the current situation where some trailers with 4-axles have been carrying up to 60 tons of the road. Good start to get road survival back on on track. But this automatically forces fleet owners to double their fleet size (and increases traffic on the roads)

Broke law : The Nation had a great story this week about lawyers quitting private practice to take up jobs with the government or corporate sector. Meanwhile a prominent law partnership has broken up

Jobs
- Cartoonists at the Nation. Apply to quickdraw@nation.co.ke
- KCB: relationship managers - asset finance, relationship managers - SME’s. Apply by 24/8 to recruitment@kcb.co.ke.

Nairobist is a great investment site with reports and charts like those in the business daily.

There as an investment report put out on Dyer & Blair that I was able to pull up from their site to read.

- They are also looking for a full time blogger - details here

- Anyone with a copy of the actual Kenya re prospectus, please email it to me? (investment bank analysis also welcome)

- Aly Khan Satchu, who used to post comments here, now has an occasional stock tips column in the Nairobi star newspaper. (His Web site)

Better 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.

IPO Wanted


To plug a hole in the budget

Kenya Pipeline is in the news again – this time suing the Kenya Times group. The company has an enviable profitable track record for a Parastatal which makes it a ripe prime candidate for an IPO but mostly gets saddled with bad news for all the wrong reasons and controversial. A dose of public shareholding will lead to greater transparency & accountability and less political football at the company which is more profitable than Kengen (It earned 3.9 billion (pre tax) in June 2006, up from 2.4 billion in June 2005 (Kengen reported 3.8 and 1.8 billion pre tax in those years)

Kenya Re earnings
Point brought out by MainaT’s comment - what was Kenya Re’s true profit in 2005?

Post TED: Kenyan wildlife
The Economist analyses hippos and cheetahs

opportunities

Jobs
- Director of internal audit at East African development bank. Apply through KPMG at esd@kpmg.co.ug by 20/6
- Investment Climate Facility for Africa: Finance Director, Director, Strategic Knowledge, Projects Director, Director, and Legal/Regulatory Affairs. Apply through PWC at recruit@tz.pwc.com by 15/6
- Project manager at inmobia. Apply to job@inmobia.com by 12/6
- Research assistants at kemri-wellcome. Apply online
- Management trainees at Kenya wildlife services. D/L is 22/6
- Chief internal auditor at Kenya women’s finance trust. (D/L is 18/6)
- Nielsen: IT system manager, research executives. Apply to hr@acnielsen.co.ke by 16/6
- Safaricom: senior manager financial systems & analysis, site acquisition officer, senior learning & development officer, senior buyers (communication, technology - 3 positions). Apply to hr@safaricom.co.ke by 15/6
- Group head of ICT at UAP insurance (D/L is 21/6)
- urgent cargo: credit controller, sales executives, HR & admin officer. Jobs@urgentcargo.com by 22/6
- wilderness lodges (owners of keekorok) head of marketing, internal auditor. Apply to recruit@adeptsystems.co.ke by 22/6

Awards
- Africa women entrepreneurs (from Ethiopia, Kenya, Rwanda, Tanzania Uganda) get voices heard and be recognized. Nominations to be submitted to the Cineartsafrika website by 29/6
- East African community students essay competition. D/L is 19/7

Partnerships
- Become a Citi hoppa franchisee. Cost at 50,000 per bus and get details at info@citihoppa.com
- Become a Keringet water distributor. Details at keringet@water.co.ke
- Get a mobile phone kiosk Sasanet. Details at sales@sasanet.co.ke

Vote The electoral commission of Kenya has reopened voter registration from June 11 to July 10 for Kenyans wishing to vote in the elections expected in December 2007.

Previous Kutwa Tuesday

Kenya Re published their 2006 results in preparation for IPO planned for June. Assets were up from Kshs. 11.6 billion in 2005 to 12.8 billion ($183 million) in 2006 and net insurance premium revenue rose from 2.1 to 2.8 billion over the same period. The year also saw management expenses increase from Kshs. 290 to 453 million resulting in a reduction of pre-tax profit from Kshs. 947 million in 2005 to 762 million ($10.9 million) in 2006.

Kenya Re accounts are straight forward, but insurance reporting is tricky. Once a year, usually between March & May), insurance companies publish their year end results. But there is no rhyme, some report only total assets, some don't report profit/loss, or net asset positions while others have more/less detail – making it difficult to compare and see which companies are performing better. I wish their reporting could be harmonized.

NIC Bank will launch an investment bank under the banner of NIC Capital to offer financial advisory services.

Earlier: I&M - new custodian.