[2008-09-22]  Why Kenya’s top firm is not starring at the bourse
As Safaricom’s share price decline drags down the total board at the Nairobi Stock Exchange, and the fortunes of hundreds of thousands of Kenyan investors, questions are being asked about what may have gone wrong in the pricing and allocation of the mobile phone company’s shares, and when the share price might be expected to rise.

Four months ago, nearly a million investors queued to participate in Safaricom’s initial public share offering — the country’s most profitable company.
In buying Safaricom shares, many of these investors had high expectations about the company’s after market prospects.

Having turned out the highest profits in corporate Kenya’s history last year, investors were convinced that there was a fortune to be made in being a shareholder in Safaricom.

Informed by the recent performance of new entrants at the Nairobi Stock Exchange, most investors expected that Safaricom’s share price would at least double within days of trading from the offer price of Sh5.

But after the initial surge that saw the share price appreciate by a margin of 35 per cent, Safaricom has been headed in only one direction — south.

Concern over the downward spiral of Safaricom’s share price deepened last week when it hit a low of Sh4.60 taking investors into the loss territory from the IPO price of Sh5.

Since its debut at the bourse, Safaricom has declined by a third, faster than the market average of a quarter, —implying there is more to the share’s slide than the prevailing bear at the market.

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