[2008-06-20]  Fury over IPO refunds
Kenyans who have spent days queuing for refunds after the Safaricom IPO expressed outrage on Thursday over delays in refunding their money.

The Central Bank of Kenya and the Capital Markets Authority, meanwhile stepped in with a directive that the process be speeded up. They also ordered banks to pay refunds of Sh10,000 or less in cash to reduce the queues.

Businessmen, workers and students who had hoped to get a share of East Africa’s most profitable company expressed anger over the delays in processing their refunds. Some said they were either required to wait in long queues or visit their stockbroker’s offices more than once before being issued with the cheques.

Others said it had been easier to apply for the shares compared to getting the refunds. Mr Job Kariuki, 36, an insurance broker in Nairobi said he went to the Dyer and Blair offices four times before he got his cheque on Thursday.

On Wednesday last week, he found the queue was too long and had to turn back. “This is my fourth time here,” he said.

Ms Evelyne Ambala, 24, an accountant at a city firm had applied for shares worth Sh10,000 with Standard Investment Bank at the ICEA Building. She was finally refunded Sh7,500 on Thursday. “I came here on the first day but I could not afford to wait in the line... I had to wait until the number of people reduced,” she said.

A the Suntra Investiment Bank on Moi Avenue, Ms Esther Wasike avoided going to collect her cheque until Thursday. She had applied for shares worth Sh50,000 but she received a Sh39,000 cheque. Ms Wasike, an accountant, excused herself from work thrice but on all occasions, she gave up because the queue was too long and was moving slowly.

Even as the queues became shorter on Thursday, others with a tighter schedule stayed away hoping the service time would reduce by next week.

Ms Lillian Wawira, a student at the University of Nairobi, has not gone for her refund at Dyer and Blair. “As I passed on Loita street on Thursday I noticed there was a queue though it was not very long but am keen not to waste even a minute,” she said.

The Central Bank and CMA have directed the lead receiving banks in the IPO to encash refund cheques of upto Sh10,000. The directive is expected to ease the confusion that has marred the refund process.

However, the lead banks — Citibank, Equity Bank, National Bank and Post Bank — will have to ensure that sufficient proof is obtained from the investors before the money is released to them.

In a joint statement, CBK and CMA also indicated that they were in talks with the authorised selling agents in the offer to ensure that the process was speeded up “through deployment of additional resources,” read the statement.

Investors have been complaining about the process that has seen hundreds of them spend long hours – sometimes days — in queues to get their cheques. However, selling agents who are issuing the cheques blamed the delays on the need to obtain sufficient proof from investors, while some did not have sufficient workers to handle the investors.

Standard Investment Bank director of research, Mr Job Kihumba said the CBK directive of encashing cheques would only be a relief to investors without bank accounts.

And while addressing a Budget review meeting in Nairobi on Thursday, Mr Steve Lugalia, the chairman of Institute of Certified Public Accountants, said the buck of the refunds fiasco stopped with the CBK, CMA and stockbrokers. “Experiences of the KenGen IPO should have given a better indication on how to handle this refund process,” said Mr Lugalia.

To avert cases of fraud and abuse, the CBK had advised against the endorsement of the cheques. “Endorsing the cheques in favour of the stockbroker amounts to taking deposits a role that the brokers are not authorised to undertake by the CBK,” the statement from Central Bank said.

The share offer attracted over 800,000 investors. The refund cheques were released to the agents on Monday, June 9.

In the IPO, the Government issued 25 per cent of its stake in Safaricom, equivalent to 10 billion shares. It had planned to raise Sh50 billion through the IPO, to finance various development programmes.

The application was however oversubscribed by 532 per cent, raising some Sh236 billion. This lead to an excess Sh150 billion, which was to be refunded to all the clusters of investors.

According to Finance minister Amos Kimunya, the success recorded by the listing of the company was an indication of Kenyans eagerness to invest in the stock market.




Source: Nation Media Group 2007