March 2006

Major queues are visible every day for the past week.. and its all kengen… This offer is targeted at the retail market, that is , guys buying below 100,000 shares. Reason being, the government wants to retain control of kengen’s boardroom and thus if it was to encourage the institutional buyers, which is group of say less than 20 organizations,.. these guys can sit together and put their own in the board, thus being a part of the decision makers,.. but with 50,000 or more shareholders each with an average of 5,000 shares, for them to come together and put someone in the board and then provide him with consistent direction is a motive of remote success.

that’s the benefit the government gets from have many shareholders subscribe for the IPO.
Another thing is that institutions e.g. NSSF enjoy handsome interest when they put their money in bank accounts unlike individuals, this means they won’t be willing to forgo this opportunity to subscribe for shares which they are not even assured of getting. Since lets you want 1,000,000 shares then you have to attach a bankers cheque of kes: 11,900,000. If you get say 500,000 shares then kengen will refund your money but at no interest for the days they will be holding this money. By the way, Kengen could make quite some money from your subscriptions for the two weeks or so this money will be lying idle in their bank account.

Another thing to consider is the fact that the logistics of refunding over 10,000 retails subscribers to the ease of refunding 100 or less institutional buyers.


The major advantage to a speculator that this IPO will offer is the fact that with so many retail shareholders then this share will be heavily traded in the nse, this is opposite of, if institutional buyers were to invest heavily since they will hold the share for long durations of time thus reducing market activity.


With heavy trading comes price fluctuations which are bread and butter of speculators..
I still hold a BUY position for the Kengen IPO.