Investors Diary

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Wednesday, February 21, 2007

Baclays Posts Pre-tax profit of Kshs 5.4 Bn

Barclays posts a pre-tax profit of 5.4bn
Written By:Emmanuel Toili , Posted: Wed, Feb 21, 2007

Barclays Bank of Kenya has announced a pre-tax profit of 6.4 billion shillings for the year ended December 31, 2006.
This is a 19 percent increase from 5.4 billion shillings realized the previous year. Managing Director, Adan Mohamed attributed the increase to new product diversification last year.
In the period under review, the bank managed to increase its branches nationwide to 62 while having 98 operational Automated Teller Machines - ATM.
Mohamed said the bank was working on an improved Personal Identification Number - PIN to enhance security for its customers.
Speaking during the release of the 2006 financial results, Barclays Bank Chairman Francis Okello said the new requirement by the Banking Act to restrict the industry on tariff regulation would adversely affect the industry's growth.
However, Okello said the initiative taken to establish the Credit Reference Bureau will enable the sector manage risks arising from credit lent to customer.

Sameer Group Denies Sugar Importation Links

Sameer group denies reports of involvement in sugar importation
Written By:Stanley Wabomba , Posted: Wed, Feb 21, 2007

Sameer Group chairman Naushad Merali Wednesday denied any of his company is engaging in sugar importation as reported by a section of the media.
Merali further denied filing a suit against the Kenya Sugar Board, the Kenya Revenue Authority and the Ministry of Finance, in connection with importation of sugar as reported by the media.
He said no subsidiary companies under the Sameer Group imports sugar nor deals with it. Sameer group's subsidiary companies include; Equatorial Commercial Bank, Sasini Tea and Coffee, Swift Global Kenya, Kenya Data Networks, Sameer Africa, Eveready East Africa, Celtel Kenya, Ryce East Africa, Sameer Industrial Park and H Young & Company East Africa.

KPLC Partners with COOP Bank in Electricity Bill Payments

KPLC in partnership with CO-OP bank
Written By:Judith Akolo , Posted: Wed, Feb 21, 2007

The Kenya Power and Lighting Company has entered into a partnership with the Co-operative Bank to enable its customers to pay electricity bills using the mobile phone and automated teller machines - ATMs.
Chief Executive Officer Don Priestman said the move would reduce lose of time in man-hours and enable the customers to cut the cost of having to travel to the KPLC offices to settle their bills.
Coop Bank chairman Stanley Muchiri said the bank was working on ensuring that its customers use cards instead of hard currency when making transactions.

Good Company Results Stirs Up Market

Turnover, index up at bourse
By Washington Gikunju

Barclays Bank shares dropped a shilling on the day it announced an improved pre-tax profit of Sh6.4 billion and a final dividend of Sh1.20, moving 678,000 shares at Sh77.
BAT Kenya also announced a final dividend of Sh7.50 per share, with its shares losing Sh8 to trade at an average price of Sh228.
Overall turnover at the bourse rose to Sh502.4 million with 6.5 million shares, up from Sh373.1 million on 4.9 million shares traded in Tuesday’s trading.
The NSE 20 share index rose by 45.38 points to close the day at 5,816.77 points.Jubilee Holdings gained Sh21 (6.8 per cent), to move 9,000 shares at between Sh339 and Sh295.
KenGen was the day’s biggest mover, having traded 987,000 shares at Sh23.25. Mumias Sugar and ICDCI moved 882,000 shares at Sh36.25 and 785,000 shares at Sh29 respectively.
Valuation of the listed companies stood at Sh793.4 billion as at close of trading.

Barclays, ICDCI rakes in Millions again

Barclays, ICDCI profits on the rise
By Tom Mogusu and Kimathi Njoka

Barclays Bank has returned Sh6.4 billion pre-tax profit for the just ended financial year.
Last year’s audited results showed a 19 per cent earning rise over the previous year.
At the same time, ICDC Investments (ICDCI) reported a 56 per cent growth in its pre-tax profits for half-year ending December 31.
In its un-audited results released on Thursday, ICDCI profits soared from Sh324 million to Sh505million, driven by a 79 per cent increase in contribution by associate companies.
Barclays said its profits before tax increased from Sh5.4b in 2005, driven by the new products and extended banking hours.
The bank’s profits after tax also increased by 22 per cent from Sh3.7 billion to Sh4.5 billion, reporting so far the highest profits for last financial year among companies.
Shareholders will get a final dividend of Sh1.20 per share which translates to Sh1.6 billion and thereby making total to Sh2.2 billion for the year. Sh2 billion will be retained for expansion.
The bank’s group managing director, Mr Adan Mohamed told an investor briefing the bank’s "innovative products continue to attract customers, making the bank the market leader."
But even with the improved performance, ICDCI will not pay any interim dividend.
The company’s investment portfolio stood at Sh7 billion end of last year compared to Sh5.2 billion in 2005.
During the period under review, the company acquired a 10 per cent stake in Rift Valley Railways, the company owning the concession rights to the Kenya-Uganda Railways.
ICDCI managing director, Mr Peter Mwangi expressed optimism the investment would yield returns in five years time.
"The investment in the railway concessionaire had all the right ingredients to give shareholders prime returns in future," Mwangi said.
Mwangi expressed optimism that the growth momentum by the company would continue.
Currently, the company has interests in beverage, property, industrial and financial and services sectors.
Its associate companies include Coco-Cola bottlers, KWAL, General Motors East Africa, Eveready East Africa, Mother+Platt, Aon Minet Insurance Brokers, UAP Provincial Insurance and Nairobi Airport Services.

Wednesday, February 14, 2007

NSE to List Before Year-end

NSE prepares for public listing
By Kimathi Njoka

The Nairobi Stock Exchange (NSE) may be a publicly quoted company trading at the bourse before the end of the year.
This is one of corporate milestones being worked out by NSE, months after it commenced electronic trading of stocks in September last year.
The development known as demutualisation is expected to result to ownership and management rights being clearly identifiable and separable from trading rights of the members of the stock exchange.
NSE chief executive Chris Mwebesa told The Standard a consultant has been hired to carryout a study whose recommendations will form the basis of the listing.
Mwebesa said the consultancy firm, Ernest & Young hired last year, has submitted an interim report and is expected to present a second report in the next few months, which may pave way for demutualisation.
Once the separation of the two roles is done, the stock exchange can list itself.
If all goes as per the plan, NSE will become the second bourse in Africa after Johannesburg Stock Exchange (JSE)to walk the route. The trend is entrenched in London and in Germany where the Exchanges operate like private companies.
The process will involve creating a share capital for the NSE and subsequently start trading as a publicly quoted company.
"Demutualising the NSE will transform it from a company limited by guarantee to a company limited by shares," Mwebesa said.
Stock Broker, Mr Job Kihumba adds that separating the ownership and trading rights is crucial in ensuring proper monitoring and regulation of members and market participants.
Currently, the NSE is a member-owned company whose board membership has more representatives of stockbrokers than other market participants.
This has posed a challenge to the enforcement of regulations on errant stockbrokers.
Mwebesa says the move is informed by a worldwide trend of separating ownership of the exchanges from owning rights.
Experts also contend that demutualising the NSE could pave way for a possible merger with the Uganda Securities Exchange (USE)-once USE follows suit.
The two Exchanges recently entered into a deal, which made it easier for companies in the two countries to cross-list their shares at the two bourses.
Currently, only Kenya Airways, East African Breweries and Jubilee Holdings are cross-listed.
This will be a radical departure from the current trend where most bourses were created by governments not as profit-making ventures and, therefore, run by members for the interest of the public.
But with demutualisation, the NSE will now be run as a business for profit, which will be beneficial to the members.
However, whereas the recommendations of the consultant will inform the way forward for the NSE, the final decision on whether to list or not will be dependent on stakeholders including stock brokers, Capital Markets Authority (CMA) and investment banks.
Experts are however warning that the envisaged benefits to members will depend on the regulations that will be put in place.
"The regime that will be put in place by the regulator (CMA) will determine whether it will be better or worse".
Established more than four decades ago, the NSE has come along way in both market capitalisation and number of listed companies.
Currently, 54 companies are listed at the bourse. Automation of trading has seen a surge in activity and settling of transactions.

Standard Group Shares Rise upon listing at Main Segment

Standard Group shares rise
By Kimathi Njoka

Standard Group’s 65 million shares have commenced trading on the main market segment of the Nairobi Stock Exchange (NSE).
The listing on the Group shares brings to 45 the number of companies listed on the Main Investment Market Segment (Mims) at the bourse.
The development follows the transfer of the Group’s 65 million shares from the Alternative Investment Market Segment (Aims) to the Mims at the bourse yesterday.
On its debut, the Standard Group shares traded at an improved price of Sh69 on a volume of 22,351 shares compared to sh68.50 in 14,639 shares traded on Monday.
The Group’s Deputy Chairman and Strategy Adviser, Mr Paul Melly, said the transfer to Mims is expected to boost the profile of the Group and enhance shareholder value. "The listing on the Mims will see an appreciation of the shareholders investment," said Melly.
NSE chairman, Mr Jimnah Mbaru, said that the listing of Group’s shares on the Mims now makes the stock appealing even to international investors.
Aims is the market segment for growing companies, which temporarily might not have the higher capitalisation and net asset requirements of the main market segment.
To list on the Mims, companies are required to have a minimum share capital of Sh50 million, net asset of Sh100 million, a five-year track record of making profits, public shareholding of at least 25 per cent and minimum of 1,000 shareholders. The Group has so far met all these requirements.
Over the last four years, the Group has recorded impressive growth in turnover and profitability.
This follows a significant transformation of the group’s operations that saw the company return a record Sh241 million in profit before tax for the financial year ended September 30, last year.
The un-audited Group results released last October showed that earnings surged by 104 per cent, doubling the Sh118 million registered over a similar period the previous year.
The Group Chief Operating Officer, Mr Paul Wanyagah, attributed the strong performance to improved corporate efficiency, reorganised management and sustained operating costs control.
Turnover rose by 16 per cent to Sh2.3 billion from Sh1.9 billion over the same period in 2005. Earnings per share doubled from Sh1.80 to Sh3.70 per share. A bonus issue of one share for every eight shares held was also declared.
Meanwhile, the Group will make major investments in upgrading its broadcasting infrastructure, to bolster its competitiveness.
The Group boasts an array of major brands in its stable including The Standard, The Saturday Standard, The Sunday Standard, Publishers Distribution Services (PDS) and Kenya’s premier TV Station, KTN.
Mbaru commended the Group’s coverage of business news, saying that the media house was on the right track.

Tuesday, February 13, 2007

Equity join League of Billionaire Companies

Equity joins club of billionaire firms
Story by MWANIKI WAHOME Publication Date: 2/13/2007

Equity Bank posted Sh1.1 billion in its profits before tax from Sh501 million, representing a 120 per cent growth in the financial year ending December 31.
Equity Bank chairman Peter Munga (left) shares a light moment with the bank's CEO, Mr James Mwangi, at the Grand Regency hotel yesterday. Equity announced a pre-tax profit of 1.1 billion for the year ended 2006.
The bank, that registered its millionth customer recently, had its deposits nearly doubled to Sh16.3 billion from Sh9 billion realised the previous year.
The total assets portfolio topped Sh20 billion from Sh11.5 billion in the previous year.
The chief executive officer, Mr James Mwangi, attributed the massive growth in profits to the expansion of the economic activities, particularly in the rural areas.
“Overall, the positive growth in profitability was supported by improved economic fortunes but we have also significantly benefited from the robust information technology (IT) platform that has seen us open alternative delivery channels, such as internet and SMS banking,” he said.
Equity, he said, had joined the big banks accounting for 32 per cent of total accounts in the country

12 more branches

Releasing the financial results at the Grand Regency Hotel, Mr Mwangi, said the bank’s operating costs had increased to Sh2.3 billion compared to Sh1.3 billion following the opening of 12 more branches in the period under review.
Other reasons were increase in staff costs after employment of 510 more workers and marketing costs during the listing at the Nairobi Stock Exchange (NSE).
The gross loan portfolio significantly increased to Sh11.4 billion, from Sh5.9 billion registered in 2005 due to increased lending to the agriculture sector and the small and medium enterprises.
However, the level of non-performing loans relative to total loan portfolio declined to five per cent from 10 due to enhanced recovery.
Mr Mwangi said the listing at NSE had pushed the bank’s core capital to Sh2.2 billion up from Sh1.4 billion.
“The increase is expected to go up after the board announced plans to issue two bonus shares for each held to support its growth strategy,” Mr Mwangi said.
This was subject to approval by the Capital Markets Authority and the bank’s annual general meeting (AGM) to be held next month, he added.
The board also announced a dividend of Sh2 per share that will total Sh181 million, representing 40 per cent of paid up capital.
In Amsterdam, Dutch bank ABN AMRO NV said that its 2006 net profit rose 7.6 per cent after it added Antonveneta to its operations and disposed of its Bouwfonds property unit. ABN also said it would buy back $1.3 billion worth of its own shares by the end of 7, and aim for per share earnings of 2.30 euros in 2007.
Additional reports by Reuters

Stock Market Bullish Again

Stock Exchange on the rebound
By Washingtton Gikunju

After weeks on dull and slow business, which analysts called ‘January effect,’ the Nairobi Stock Exchange (NSE) has started showing signs of improved activity.
In Monday’s trading, turnover improved to Sh406 million on 4.6 million shares, against Sh377 million on 5.3 million shares traded on Friday.
"This cannot yet be said to be a complete turnaround, but it is evident that the market is now beyond the cooling off and price correction phase, the trading environment is going to be more stable in the coming days," said Mr Chris Mwebesa, the NSE chief executive.
The NSE 20 share index gained 78.14 points to close the day at 5895.18 points.
Market capitalisation also rose to Sh816 billion, an improvement on Friday’s closing figure of Sh814 billion.
After announcing a 120 per cent increase in profits to Sh1.1 billion and Sh2 per share dividend, the Equity bank shares rose by Sh17 (7.4 per cent) to trade 560,000 shares at Sh248.
Mumias was the most heavily traded counter, moving 667,000 shares at reduced price of Sh36.25, Sh6.50 less than Friday’s price.
Meanwhile, the NSE has a new look website, more informative website with up to date information.

Bamburi Cement Pre-tax Profit hit 3.8Bn in 2006

Bamburi Cement posted 3.8bn pre tax profit in 2006Written By:Emmanuel Toili , Posted: Tue, Feb 13, 2007

Bamburi Cement has posted a pre - tax profit of 3.8 billion shillings for the year ending December 31, 2006.

Chairman, Richard Kemoli attributed the high profits on the ability for the company to export cement products in the region.
Bamburi is among the main cement manufacturers in the East African region.
The company has grown its market in northern part of Tanzania, Southern Sudan, Democratic Republic of Congo, Rwanda and Burundi.
Kemoli said the company turnover grew by 10 per cent to stand at 16.7 billion shillings. Speaking at a news conference, Kemoli said shareholders would now earn 1 shilling and 50 cents dividend per share.
The company says a devastating drought at the beginning of last year saw the amount of disposable incomes dwindle as productivity in key sectors slowed down in the region's economies.

Equity Profits Up, Issues a Bonus of 2:1

Equity profit leaps by 120pc
By Tom Mogusu

Equity Bank has announced it had more that doubled its profitability during the financial year ended December 31.
The bank registered a record 120 per cent growth in pre-tax profit, from Sh500 million registered in the previous year to Sh1.1 billion.
The bank’s managing director, Mr James Mwangi, told investors on Monday the growth was driven by a significant improvement of the loan book and prudent risk management principles.
He said a strong economic performance and conversion from a building society to bank contributed to the good run. Mwangi said the change of perception by Kenyans to build local brands also supported the performance.
During the period under review, total assets grew by 74 per cent from Sh11.5 billion to hit the Sh20 billion mark, while customer deposits increased by 81 per cent from Sh9 billion to Sh16.3 billion.
"The growth in profitability was also supported by a robust information technology (IT) platform that enabled the bank to open up alternative delivery channels such as Internet and SMS banking."
The bank also chalked up more business after listing at the Nairobi Stock Exchange, a move that increased Equity’s brand visibility.
The customer base increased from 556,000 in 2005 to 1,014,474, while the number of branches increased from 31 to 42.
The bank’s gross loan portfolio increased significantly from Sh5.9 billion to Sh11.4 billion due to increased lending, especially to the agriculture sector and small and micro enterprises.
"Despite the increase in the loan portfolio, the level of non-performing loans relative to the loan portfolio remains quite low owing prompt follow up and recovery," Mwangi said.
The bank’s interest income on loans was up by 117 per cent from Sh692 million to Sh1.5 billion.
The board of directors announced a dividend payout of Sh2 per share, which is 40 per cent of the paid up capital.
Mwangi announced that the bank plans to roll out the second phase of its expansion strategy in key regions in the country.
The bank, he said, will also increase the use of its IT platform to introduce more delivery channels and points of sale.
"We will scale up out out-reach programmes because we are aware that our competitors are also targeting the small and micro segment for growth and that is why they have been opening new branches."

Wednesday, February 7, 2007

Trading Improves at NSE with mixed prices

Mixed prices at NSE as trading improves
By Washington Gikunju

The recent slump trading at the Nairobi Stock exchange (NSE) appears to be nearing stabilisation, with a slight improvement recorded in the number of shares traded.
Turnover, however, dropped to Sh343 million on 5.6 million shares, against Sh351 million on 4.6 million shares recorded in Monday’s trading.
The fall in the NSE 20 share index also seemed to stem with only 4.73 points lost in Tuesday’s trading, which closed at 5628.88 points. The index linked stocks recorded mixed trends.
Market capitalisation registered a slight upturn, closing the day at Sh801 billion, up from Monday’s figure of Sh800 billion.
On a day it announced acquisition of Shell Ethiopia operations comprising of 81 service stations and two terminals, Kenya oil Company (Kenol) gained Sh2.5, to move 23,800 shares at an average price of Sh102.
Equity Bank was the day’s highest gainer, moving 155,000 shares at an average price of Sh217, Sh17 higher than Monday’s closing price. East African Breweries gained Sh7, moving 101,765 shares at an average price of Sh154. CMC Holdings moved 112,500 shares at an improved price of Sh164, up from Sh159 recorded on previously.
Bamburi Cement lost Sh10 to settle at Sh214, while CFC Bank lost Sh29 to move 100 shares at Sh270. In the agricultural sector, Sasini Tea and Coffee lost Sh4 to move 22,300 shares at Sh132.
The Mumias counter, which has recorded increased activity, traded a massive 1.5 million shares at between Sh43 and Sh40.
KenGen and ICDCI were the other big movers, trading 857,000 shares at Sh22 and 727,000 shares at Sh30.25 respectively. Scangroup fluctuated at between Sh21.75 and Sh24.25 on a volume of 619,000 shares.
The bonds market registered a turnover of Sh389 million, having recorded no activity in Monday’s trading.

NSE on a Slight Upturn after Bear run

Market slows down price fall
Story by WACHIRA KANG’ARU Publication Date: 2/7/2007

There were no major price changes yesterday as the market showed signs of slowing the price slide that has characterised it for weeks.
The NSE 20-Share Index, an indicator of price movement, shed a marginal 4.73 points to stand at 5628.88, against 30.04 points that fell off on Monday.
The index shaved-off 297.96 points last week to settle at 5663.65, completing reversal of gains made since the year began. Only CFC Bank returned a double digital fall (10 per cent) as it attempted to regain normal price after a surged to Sh900 from low of Sh131.
The increase was triggered by news that the bank was on the verge of sealing a merger with Stanbic Bank. Equity Bank gained the most, adding 9 per cent or Sh19 to Sh217, selling 155,000 shares.
Lower value
The number of shares that exchanged hands rose to 5.6 million against 4.6 million but at a lower value of Sh343 million against Sh351 million traded on Monday.
The bond market returned to activity, after failing to record any transaction on Monday, to sell bonds worth Sh389 million.
On individual counters Mumias Sugar moved 1.5 million shares at between Sh40 and Sh43 to average Sh40.25, dropping a shilling and fifty cents.
The sugar manufacturer’s share price has been on a decline since the secondary offering by the Government last month.
The 91 million shares were sold to the public at Sh49.50 to raise Sh4.5 billion for Government budgetary support.
ICDC Investments moved 727,000 shares at between Sh27.25 and Sh32.50, while Barclays Bank shed 50 cents to stand at Sh76.00 with 351,000 shares realised.
KCB, up Sh4 to Sh228, moved 127,000 shares, while Kenya Airways topped up three shillings to Sh105, moving 104,000 shares.
Kenya Power and KenGen remained firm, trading at Sh280 on 19,000 shares and Sh22 on 857,000 shares respectively.
Sasini Tea eased four shillings to close the day at Sh132 on a volume of 22,000 shares. Scangroup fluctuated at between Sh21.75 and Sh24.25 on a volume of 619,000 shares.
In the alternative investment market Kapchorua Tea dropped three shillings to Sh122 selling 1,600 shares while Standard Group moved 8,000 shares at Sh62.50.

Kenol Shares Up with another acquisition

Kenol buys Ethiopian oil company at Sh4b
By Kimathi Njoka and agencies

After consolidating its presence in East, Central and Southern Africa, oil marketer, Kenol/Kobil has spread its wings to Ethiopia.
The firm on Tuesday confirmed that it had acquired half of Shell Ethiopia operations, giving it the widest network in the region.
The acquisition, estimated to be in upwards of Sh4 billion, includes two terminals and a retail network of 81 service stations spread across the country. But officials declined to confirm the cost of the investment.
The Group, through its Ethiopian subsidiary, Kobil Ethiopia, has now bought half of the Shell Ethiopia operations-effectively giving it the widest network in the region as the firm seeks to widen its market share.
Shell Ethiopia now becomes the group’s first major acquisition towards the North African region. The acquisition comes two years after the company opened a subsidiary in the country.
The news about the acquisition saw the Kenol Stock price at the Nairobi Stock Exchange (NSE) surge by Sh5.50 on Tuesday to trade at Sh105 from Sh99.50 the previous day.
A total of 23,800 shares were traded up from 18,061 shares traded on Monday. Shell Ethiopia is a member of Shell International Group.
Prior to the acquisition, Kobil Ethiopia had acquired one service station in Semera, along the Addis Ababa – Djibouti route. The new acquisition includes a Head office in Addis Ababa consisting of a two-storey building, other office buildings, warehouses and a major restaurant situated on the main Debrezeit Road.
Through the acquisition, Kobil Ethiopia hopes to consolidate its fuels business in the country, as well as the sale of the Kobil Lubricants and LPG brands. The company plans to put up an LPG storage and filling facility to supplement its LPG business in the country.
The Group’s initial regional expansion focused on East Africa, and most notably in Uganda and Tanzania. The Group then moved towards the Central and Southern African regions in 2002, into Zambia and Rwanda.
In Zambia, it made a major acquisition after buying entire assets of Jovenna Zambia Limited from Ned Bank of South Africa. In Rwanda, the firm started with wholesale business in 2002 and one station until February last year when it made an acquisition of Shell Rwanda SARL.
Last month it acquired 20 service stations from KLSS Rwanda.
"The new assets in Ethiopia are a rich investment in a country that has great potential and growth opportunities", the group chairman and managing director," said Mr Jacob I. Segman, in a statement.
Although, the Ethiopian petroleum market, currently heavily regulated and with relatively low margins per unit, the group is optimistic of realising good returns.
"The acquisition should open attractive opportunities in oil trading into the country, LPG importation and distribution, Bitumen and Non Fuel business.
Meanwhile, British oil exploration company White Nile, hopes to start drilling in south Sudan by April 1, a company official said, adds Reuters.
French energy giant Total SA disputes White Nile’s contract with the south Sudan government, which gives the British company part of an oil exploration block previously allocated to Total. White Nile is 50 per cent owned by south Sudan’s state petroleum firm Nilepet.
The autonomous southern government was formed after a north-south peace deal in January 2005 ended a long civil war that was fought partly over oil.
"We’re planning on sinking our first well on April 1," Philip Ward, chief operations officer for White Nile told Reuters.
Ward said drilling equipment should arrive in the Kenyan port of Mombasa next week.
"We are in the process of discussing security arrangements with the authorities for the transport of the equipment (through south Sudan)," he added.

Tuesday, February 6, 2007

Treasury Prepares Cabinet Paper on safaricom IPO

By John Oyuke

Kenyans will soon have a chance of owning part of the multi-billion shillings Safaricom Limited.

Finance minister, Mr Amos Kimunya says Treasury has already prepared a Cabinet paper on the Safaricom Initial Public Offering (IPO), which if approved will see the listing of the giant mobile operator before the end of this year.

He said the Government is also undertaking a study to determine the percentage of shares it would offload into the market and the pricing of the offer.

"We are determined to have the process completed for the floatation to happen this year and all that we are asking Kenyans is to increase their savings in readiness for the offer," he said.

Though Kimunya was reluctant to reveal the amount of Safaricom shares the Government is likely to offload, officials say the State plans to float 25 to 26 per cent.

He was speaking to journalists during the launch of United Nations Global Compact Kenya chapter in Nairobi yesterday.

Sh18 billion earmarked from privatisation

The Kenya Network of the Global Compact initiative is being implemented by the United Nations Development Programme (UNDP) in partnership with the Federation of Kenya Employers (FKE), Kenya Association of Manufacturers (Kam) and the Kenya Private Sector Alliance (Kepsa).

Kimunya said the Government intended to eventually dispose of all the 60 per cent shares in the mobile telephone service provider.

He expressed confidence that the Government would raise the Sh18 billion it earmarked from privatisation during the year 2006/07, adding that already it had raised Sh4.5 billion from Mumias Sugar Company.

The Government is also in the process of selling an additional 19 per cent of KenGen shares in the current financial year.

Also lined up is the sale of 40 per cent shareholding in Kenya Reinsurance through an IPO, as part of the Government’s ambitious plan to raise the Sh18 billion.

Safaricom is a joint venture between Telkom and Britain’s Vodafone Plc, with Telkom owning 60 per cent and Vodafone 40 per cent.

Under the stewardship of Michael Joseph, as chief executive, Safaricom recorded the highest profit of Sh12 billion last year.

Telkom used part of Safaricom shares as collateral

The government had initially indicated plans to offload a nine per cent additional stake in Safaricom to UK-based Vodafone to raise funds to restructure the loss-making Telkom Kenya in preparation for its sale.

Share-hungry Kenyans have been pressuring the Government to list the stake at the Nairobi Stock Exchange. However, following intense negotiations, Vodafone, which owns a 40 per cent stake in the company, agreed to waive its pre-emptive rights.

This paved the way for Telkom Kenya, which holds 60 per cent shareholding in the mobile firm, to directly borrow Sh5.8 billion from banks to finance its restructuring programme. Telkom used part of Safaricom shares as collateral for the loan.

The loan was advanced by eight commercial banks— Barclays Bank, Standard Chartered Bank, South Africa’s Standard Bank and Kenya Commercial Bank. Others are NIC Bank, CFC Bank, Commercial Bank of Africa and East African Development Bank.

The company had already laid off around 2,800 workers at a cost of Sh2.1 billion but was forced to delay further job cuts due to lack of funding.

Telkom would be expected to pay back the loan by the end of one year.

Govt Shares in Safaricom to be offloaded soon in IPO

By:Emmanuel Toili , Posted: Tue, Feb 06, 2007

The government is preparing a proposal for the sale of an extra 3 percent of its shares in Safaricom.
Finance Minister, Amos Kimunya says the government has already secured a guarantor for the sell of 9 percent stake at the mobile phone company.
The government's bid to sell 12 percent stake in Safaricom will receive a boost if the Cabinet approves a viability report by the Finance Minster.
Kimunya said the floatation of the shares will only take place once it is confirmed that investors are able to buy them.
Last month the government and Vodafone plc of the United Kingdom signed a waiver agreement allowing the government to offload 9-percent shareholding in Safaricom.

IPO Rules may be Overhauled

By Washington Gikunju

The Nairobi Stock Exchange (NSE) has proposed radical changes to overhaul the manner Initial Public Offerings (IPOs) are conducted.
NSE board says the changes are aimed at enhancing efficiency in the processing of IPOs.
Among the changes is that IPOs that exceed certain thresholds, say Sh5 billion, should be handled by at least three receiving banks.
This is to avoid distorting the banking sector during the offer period, the board says.
The proposal comes amid claims that the KenGen IPO nearly caused chaos in the banking sector owing to the huge amounts that were involved.
" The fact that the KenGen issue had only one receiving bank had a huge impact on the banking sector, which resulted in a liquidity crunch in the banking sector. The inter bank rates went up as all banks sought to access money from the one bank," read the statement.
The decision to review the entire IPO process was made by the board during its 2006 planning retreat.
It is aimed at incorporating experiences gathered from past IPOs into the way future issues are handled, a statement from the board said on Monday.
In the past one year the NSE has handled three IPOs and a secondary offer. The new proposals will be discussed at an IPO workshop slated for Friday this week.
Other proposals include mandatory training and certification of agents who handle IPOs.
The NSE and the Central Depository Systems Corporation (CDSC) also want to be involved in the pre-listing process so as to make the entire IPO process smooth.
NSE has also called for a supplementary timetable for IPOs in addition to the main timetable.
This is to cushion the entire process against the effects of unforeseen adjustments in the main timetable, the statement added.
In the past, the main timetable has had to be shifted resulting in insufficient time being allocated to subsequent events. Citing the Mumias Sugar secondary offer, NSE said, though the time for submitting applications was extended for three days yet no extension was granted for subsequent events.
Other issues to be discussed include new methods of setting share prices and the handling of refunds.
Previously investors have accused receiving banks delays in remitting their refunds.
Other participants at the workshop to be held, on Friday at the Kenya School of Monetary Studies, include transaction advisors, sponsoring stockbrokers, the registrars, receiving bankers and the CDSC.
Meanwhile, activity at the bourse remained subdued as the week opened with all the market indicators dropping.
Market capitalisation stood at Sh800 billion at close of business yesterday, Sh13 billion less than the figure recorded on Friday.
But in the gloomy picture, analysts remain optimistic, predicting a turnaround with the realisation of the proposed IPOs and the announcement of performance results for many of the listed companies.
Turnover dropped to Sh351 million on 4.6 million shares traded against Sh413 million on five million shares traded on Friday. The NSE 20 share Index, lost a further 30.04 points to close the day at 5,633.61 points.

Thursday, February 1, 2007

NSE going Bearish?

After a good spell during the first few weeks into the new year that saw the NSE share index surge above the 6000 level, the market appears to have gone down south with most counters registering lower average daily prices than the previous day prices.

Though the market is bracing itself for a season of new releases of financial results by most companies across the various counters, pundits are cautiously watching how far this would go.

Nevertheless with expected economic growth likely to hit 6% mark, the news can only be seen as a promise of good tidings for most players in the market and a time of better returns accruing to investors.

'The bearish trend seen during this time is a short term correction mechanism of the stock market and nothing to worry about as most counters had been overprices given the consistent surge during the last months of 2006 ' ackowledges Geoffrey Koech a Portoflio Analyst with Patana Securities Ltd.

He further observes that the speculative trends of most market players is also a factor at player in addition to increased supply accross various counters as investors offload to pay off fees and meet other engagements during the month of January.

For more read

NSE Index slides further

After jumping to over 6,000 points as the year prepared to close, the NSE 20 share Index is now in a free slide.
From last week, the Index has been shedding off, a trend which continued on Wednesday when it lost 96.41 points to stand at 5774.27.
Some 5.2 million shares valued at Sh367 million were traded, inching up from Tuesday’s turnover of Sh365 million on 5.5 million shares. On a day it announced the search for a new chief executive officer, Kenya Commercial Bank lost seven shillings to Sh232 on 137m shares traded.
KenGen was the day’s biggest mover with 1.4 million shares dealt at between Sh21 and Sh24.50. Mumias Sugar nudged downwards to close at Sh42.25 on a volume of 298,000 shares.

Kenya Re to employ two top managers before IPO in April

The sale of Kenya Reinsurance Corporation shares is likely to start in April as scheduled, Investments secretary Esther Koimett has said. However, the Government has adopted a wait-and-see attitude after the firm yesterday announced its intentions to fill the vacant positions of managing director and head of finance. The holders of the two posts were sacked last month to pave the way for investigations into allegations of financial impropriety.
The sale of the corporation’s 60 million shares was expected to be concluded by end of April but might be delayed to give the company time to reorganise its management. On January 11, the Kenya Re board terminated Mr Johnstone Githaka’s and Mr John Kinyua’s contracts. They were respectively managing director and head of finance.
Both were under suspension pending investigations.

Summarily sacked :
“They were summarily sacked and now the board has opened the positions to the public,” said Mr Evans Amalemba Juma, the acting managing director. According to Ms Koimett the need to fill the positions before listing is meant to appease investors by adding certainty in the corporation’s affairs. “We could not list with an acting managing director,” she said.
Those interested in the job have until February 16 to submit their applications to the board vie e-mail to Business Ideas, the company executive search and selection partners.
Ms Koimett and Mr Juma are optimistic the listing of the shares will go on as scheduled.
The sale is expected to raise money to cover part of the Sh18 billion budgetary deficit for the 2006/07 financial year.

The Government has already raised Sh4.5 billion from the sale of Mumias Sugar Company shares.

“We are sure it will go through before the end of April,” said Mr Juma, echoing earlier sentiments by Finance minister Amos Kimunya when he disclosed that the Government had launched investigations on corruption allegation at the parastatal.

Tourism Sector 56bn up in 2006

Written By:Emmanuel Toili
Posted: Wed, Jan 31, 2007

The tourism sector earned 56 billion shillings last year up from 49 million shillings recorded in 2005.
Kenya Tourist Board Managing Director, Dr. Ongong'a Achieng' attributed the increase to major airlines increasing flights into the country and aggressive marketing campaigns.
In as much as the tourism industry has recorded an increase in tourism an arrival of 1.8 million last year, the sector faces a cutthroat challenge in bed capacity.
The hotel industry had to contemplate accommodating the enormous delegates attending international conferences.
The bed occupancy hence increased to 25,000 last in comparison to domestic bed occupancy of 15,000 last year. Kenya Tourist Board Managing Director, Ongong'a Achieng' said the hotel sector requires to increase its bed capacity by 10,000 every year.
Speaking at a press conference, Ongong'a said the hotel industry was incurring high energy costs at extra costs of 6 million annually.
Last year, the United Kingdom led in tourism arrivals registering 171 thousand visitors. The North American market regained its second position, closing the year with 86,500 tourists.

Pesapoint goes global

Written By:Stanley Wabomba
Posted: Wed, Jan 31, 2007

MasterCard, American Express and Japan Card Bureau cards Wednesday joined Kenya's PesaPoint automated teller machine - ATM network.
PesaPoint managing director Bernard Matthewman said use of the three cards will ease accessibility of funds by tourists and other visitors while in the country.
Speaking in Nairobi, Matthewman said PesaPoint ATMs will be availed in airports, tourist attraction centers and major highways to avail cash to those with accepted cards in a move likely to boost spending by visitors.
He said the service will also target visitors attending international conferences and events.
He said PesaPoint, which is hooked to 14 financial institutions operating in the country, is in talks with those that have not joined their network so as to have all financial institutions on board by the end of this year.