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7 items tagged "investor and awareness and NSE"

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• June 05, 2009
• 9:26

  Pyramid Schemes in East Africa

   » ‎ bankelele

  Tags:  NSE investor awareness  

  Back in October 2006, I wrote two posts about pyramid schemes that had mushroomed and would eventually ‘burn’ thousands of investors in Kenya.
  
  And the last year has revealed bigger pyramid scams in the form of Bernie Madoff and Alan Stanford, and just yesterday in the Kenya Parliament, some political leaders were un-masked as some of the master minds behind some of the collapsed Kenyan schemes.
  
  Image of pyramid investors from another business daily newspaper article on pyramids
  
  So what was the genesis of the schemes and how they ended? And more important, can they happen again?
  
  Pyramids Rise
  - Early investors reaped, and told others about their success - i.e. doubling, tripling or even greater returns in a few months span
  - Some schemes were promoted by churches (who received tithes in return)
  - Pyramids opened new offices and hired new staff all around the country
  - New pyramids opened up cloning existing ones, but promoting a slightly different product/concept
  - People took loans to invest in pyramids
  - Peoples sold land/ shares / other assets to invest in pyramids
  - Pyramid investors cut across all sectors from rural farmers to bank managers
  
  Pyramids Peak
  - Early investors reaped, but were greedy and ploughed back as much as they won
  - Pyramids grew so big they overwhelmed their managers – some stopped accepting new depositors (but not new deposits which were essential to the chain)
  - Banks complained they were losing deposits at a time when interest rates were very low
  - With IPO's few and far between, stockbrokers complained they were losing investors during a bull market period
  
  Pyramids Fall
  - Banks put the squeeze on pyramid schemes, by freezing these recipient accounts with the funds in them
  - Pyramids without cash, tried to switch to different banks and accounts to process their funds
  - Banks warned other banks and the Central Bank issued some cautionary notices on schemes
  - Some pyramids tried to convert into cooperative societies
  - Some schemes bad-mouthed other pyramid schemes as unstable
  - When locked out of banks, pyramids moved to safe houses in residential areas where they continued to receive/pay cash
  - media coverage kicked in; some angry investors complained on TV about lost money and brought media crews to the safe houses showing other angry investors
  - Deposits dried up, and investors demanded their cash.
  - Pyramid schemes all collapsed largely at the same time in 2007
  
  Sifting the rubble
  
  Could they have been prevented?
  - They were unregulated: Neither the central bank, capital markets or co-operative sector regulator had over-sight over the schemes. Parliament was focused on micro-finance and anti money-laundering regulation bills.
  - KYC: Schemes relied on the banking system to move around the money; and if banks applied true know your customer (KYC) principles, they’d have smelled a rat - with hundreds of people queuing in their halls to deposit funds into a single customers account
  
  Unanswered questions
  - What happens to the millions of shillings frozen in bank accounts?
  - What happened to employees of these schemes? And if rogue stockbrokers were partly brought crash down by thefts from within (internal fraud /‘robbers robbing robbers’) could this also have happened at some schemes?
  - Legal grey area still exists. Have any promoters being charged in court? Can any investors sue promoters for losses? The Cooperatives Ministry Task Force is looking at how to compensate investors - but is this justifiable?
  - Can schemes rise again? History teaches us that pyramid/ponzi schemes will happen again and again. Maybe using the mobile money transfers, or next time there’s an election. The Business Daily mentions they may have spread to neighbouring countries
• March 28, 2009
• 1:54

  Rea Vipingo 2009 AGM

   » ‎ bankelele

  Tags:  NSE investor awareness  

  Nairobi Stock Exchange listed Rea Vipingo Plantations Limited and one of leading producers of sisal held’s its’ 2009 annual general meeting on March 27 2009 at the Panafric Hotel Nairobi
  
  Meeting started at 11 a.m. sharp with a short video shown about the company explaining more about its background and what it does - Created by an amalgamation of companies in 2003 that acquired more estates in Tanzania in 1995, got listed on the NSE in 1996. Since it was listed sales have grown from Kshs 537 million to Kshs 1.2 billion and production is now at 17,000 tons per annum
  
  The meeting led by company chairman Oliver Fowler went straight into shareholder questions immediately after the video
  
  Professional shareholder alois chami stood to ask a question (he’s at every AGM and always asks a couple of inane questions – virtually all company chairmen & secretaries know him by name) – but his mobile phone went off and he had to sit and answer it about a half dozen phones go off at every meeting, and some shareholders magnify this discourtesy by answering the calls
  
  how the company’s’ performance was in 2009? Chairman said it was quit good, maintained their markets, still getting good buys from China, while the weak shilling/strong $ has also helped them
  
  impact of the global economic crisis? performance still good as company has good cash position, scaled back capital expenditure and made some cutbacks. Still they can’t predict how the sisal industry will perform and are also nervous
  
  competition from petrol twine versus their sisal twine (the price of oil is 1/3 of what it was a year ago). Chairman said their primary competition, was not from synthetic twine, but from other sisal produces – as they were all competing for a diminishing pool of customers
  
  if company doing well, why reduce dividend? (from Kshs 0.8 per share in 2007 to 0.2 in 2008) Chairman said at the time of the decision, they actually intended to pay no dividend since the outlook was so grim (and wanted to conserve cash), but since they got some contracts, decided to make a modest payment
  
  does low share cap hinder borrowing?no it does not, their borrowing is quite low considering the value of the company’s assets and which bankers look at more. Their facilities are up fro renewal next month, but don’t expect any hitches
  
  how much are contingent liabilities? (no figure was indicated) chairman said they would be mostly for industrial claims covered by workmen compensation and there were no material claims of substance
  
  no logo/signature by directors & auditors in the published accounts Chairman assured shareholders that they had been signed and the auditors had signed and the accounts could be verified a their office or the company registry (Chami got his act together and asked this, he was later brushed aside by another shareholder when he kept hammering this trivial point)
  
  subsidiaries part of profit came from fair value gain (a book profit, not actual profit) as well as from revaluation of biological assets
  
  does having a golf course add value to the company? Chairman took a moment do correct a misunderstanding that is occasionally repeated in media and the company Rea Vipingo is not the developing real estate or golf courses in Vipingo, Kwale (Coast Province) it is being done by another company adjacent to the sisal estate (and while they were all part of the original sisal estate – the land that was not suited for sisal production (sandy beach) is being used by the other company)
  
  what does company do for CSR? Company engages in corporate social responsibility – staff are housed at sisal estates in Kenya and Tanzania and receive medical care while children are schooled in nursery and primary school on estate, with some getting scholarships to high school . they have in the past been involved in famine relief and distribution in Makueni district, but in 2009 the government has not requested their assistance
  
  dry season affect sisal? sisal is drought resistant, but prolonged dry season can affect production
  
  bank borrowing chairman was asked, but explained they had take some foreign loans, and one from a supplier (Wigglesworth) since they were a lower rates than bank loans
  
  director elections after 12 years of service director Musa Sang retired from the company board during the year and he was replaced by Brown Ondego (chairman of rift valley railways, and former MD of Kenya ports authority). shareholders confirmed his election, but also (again) asked to consider getting (i) female directors and (ii) younger directors (these will being new skill like ICT to c company which did not have a website till a few years ago)
  
  hot button moment director allowances in asking the shareholders to approve non-executive directors remuneration for 2009, the chairman mention that they will rise by 10% - from Kshs 30,000 per month to Kshs 33,000 per month (~$400). Some shareholder briefly protested that their dividend was being cut while directors get paid more, and that the directors’ increase should also wait till the economy and company’s performance improved. The board poorly defended this matter, but it was passed without much interruption
  
  special business shareholders approved the board decision to purchase an additional 330 hectares for sisal production from vipingo estates limited (VEL)
  
  goodies one shareholder stood and complained that the company had NEVER given shareholders a token item of appreciation, unlike other companies, and the chairman said they would once, performance improves. Tea and snacks were served outside by the pool, but it was a mad scramble that left many unhappy as the bitings were finished by the early grabber
  
  networking had a nice chat with Coldtusker and Ryan Shen Hoover while this was going on
• September 26, 2008
• 8:40

  Missing the Kenya Airways Party

   » ‎ bankelele

  Tags:  NSE investor awareness  

  Missing the Kenya Airways Party
• May 30, 2008
• 7:15

  Diamond Trust 2008 AGM

   » ‎ bankelele

  Tags:  NSE investor awareness  

  Diamond Trust 2008 AGM
• February 21, 2008
• 6:46

  ICDCI AGM

   » ‎ bankelele

  Tags:  NSE investor awareness  

  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
• August 11, 2007
• 5:38

  Pre KQ AGM

   » ‎ bankelele

  Tags:  NSE investor awareness  

  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.
• July 17, 2007
• 0:13

  Idea exchange: Call for papers

   » ‎ bankelele

  Tags:  NSE investor awareness  

  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)