[2008-06-19]  Kenya’s Safaricom IPO leaves investors disappointed
NAIROBI — East Africa’s biggest initial public offering (IPO) was hailed as a huge success after massive oversubscription in Kenyan mobile company Safaricom and a 50% share price rise on its debut. But for many of the country’s growing legion of small investors, it was a big disappointment after they received just 21%-31% of the shares they had applied for. Thousands of those small investors took bank loans, hoping to cash in on the issue, which attracted 236-billion Kenyan shillings ($3,68bn) worth of applications against a target of 50-billion shillings.
“I lost 4000 shillings which the bank was charging to process loan applications,” said Wanja Ngure, a 27-year-old social worker who borrowed 200000 shillings to invest. Kenya’s government sold 25% of its 60% stake in Safaricom. Like other Kenyans who borrowed heavily to take part, Ngure is now feeling the pain of her loan repayments. At the height of the IPO fever in April, banks paid for prominent, flashy adverts offering financing for the shares. Details of the total amount they lent to investors were not immediately available, but the East African newspaper put it at 20- billion shillings. As the shares made their long- awaited debut last week, anxious individuals milled around the bourse in downtown Nairobi. The number of investors at the exchange rose by 700000 after the IPO, bringing the total number to nearly 2-million. Many had hoped for a repeat of the KenGen debut in 2006, when the energy firm’s shares doubled their IPO value. But it was not to be and, while analysts expect the stock to continue to rise gradually, that has caused some resentment. “The price is low and I am disappointed with the amount that I was allocated,” said John Masinde, a 45-year-old small business owner who applied to buy shares worth 80000 shillings.

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