WARNING:THE INFORMATION BELOW MAY BE HARMFUL TO YOUR WEALTH.CONSULT YOUR INVESTMENT ADVISOR,STOCKBROKER,BANKER,ACCOUNTANT OR OTHER PROFFESSIONAL ADVISOR ON THE COURSE OF ACTION YOU SHOULD TAKE.
SCANGROUP IPO-THE FACTS
I have just read the SCANGROUP prospectus. The following facts worried me:
-69 million shares are being sold.The Vendor(Bharat Thakrar)gets the proceeds of 60 million shares that is Ksh.584,176,501 while SCANGROUP gets the proceeds of 9 million shares i.e. Ksh73,883,843.
So the company is to expand and retire debts on Ksh.73 million and the Vendor pockets Ksh.584 million. Thats what i call capitalism.
-The group has a long term liability of Ksh 990,000 that is not properly disclosed on Page 92 of the prospectus. We are not told to whom the loan is owed, the duration, the terms of the loan etc. Remember Net Profit in 2005 was Ksh 148 Million
-SCANGROUP and CFC Financial Services Ltd-Which is the Transaction Advisor, Joint underwriter and Sponsoring Stock Broker- share the same Company Secretary one, Ramesh R. Vora. Is this a conflict of interest?
-SCANGROUP has 50% of the Ad. market can it grow further? Thats the way Barclays dominates the Banking sector
Inspite of the above facts , i shall buy the shares because the market currently favours IPO's .Hopefully,I shall be able to flip them after listing for a profit.