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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.

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