[2008-06-10]  Safaricom hits KSH300bn
Shares in Safaricom rose 50 percent on the first day of trading adding KSH100 billion of new wealth in one of Africa’s richest IPO debuts that now values the company at KSH300 billion.

In the first 20 minutes of trading, the Nairobi Stock Exchange (NSE) had transacted business worth KSH1 billion, in what is now a historical breakthrough that has pushed the value of all shares listed on the exchange, also known as market capitalization to KSH1.2 trillion, which is equivalent to three quarters of Kenya’s formal economy.

Safaricom now with a market capitalization of KSH300 billion is by far the most valuable—and among the best performing in terms of total shareholder returns in Kenya and in the wider emerging frontier markets globally.

Though analysts contend that Safaricom’s share price is fairly valued, compared to other mobile operators in Africa such as Egypt Mobile and Sudatel who rank roughly equally in revenues, the security had been priced at a discount to give it the first day “pop-up” in price that would satisfy local investors, 860,000 of whom drove up the subscription levels to KSH200 billion, while the Treasury only needed KSH50 billion for the 25 percent stake it was selling.

This led to a lot of disappointment from investors especially those who had borrowed from banks hoping to buy more shares. But with investors getting an allocation rate of 21 percent, these investors are currently waiting for over KSH150 billion in refunds from the money the government left on the table.

Globally, Safaricom IPO has attracted a lot of media attention and the successful debut marks a coming of age of the Kenyan capital markets and in particular the NSE as a destination for high growth opportunities among emerging frontier markets location around the world in the eyes of foreign investors.

The success of Safaricom—which attracted KSH76 billion from foreign investors—is also likely to signal a dramatic turnaround for the image of the country, which suffered at the beginning of the year when politically motivated violence broke after the disputed presidential election vote tally.

This was unexpected by investors. However, the political settlement and the establishment of a coalition government headed by President Kibaki and Prime Minister Odinga has played a big role in reassuring foreign investors, who invested heavily in this privatization, but they only got minimal shares of what they would have wanted.

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