EXTREMELY SIMPLIFIED SAFARICOM/VODAFONE SHAREHOLDING STRUCTURE-II
A fellow blogger Keith has mirrored part of the original post on his blog.He has also drawn a more LEGIBLE chart of the probable Shareholder structure.
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Safaricom IPO - What a Mess (Investor Opinion):
Ati 5 bob with minimum 1000 shares? Ridiculous! Is there political pressure or are the transaction advisors a bunch of morons?!!!
According to BdAfrica, we're talking of an additional 1.5 million shareholders in the Safcom Shareholder register.
POST-IPO COSTS:
Has anyone thought of the massive costs of organizing AGMs, Priniting Annual reports, sending out dividend cheques etc? At a macro level, Infrastructural and resource demands for processing a massive number of small value share allocations needs to be thought about!
INVESTOR LOSSES:
Serious investors lose out if all they get is a paltry 1000 shares worth 5000 bob. Even if there is a massive bull run resulting un 500% increase - you only get 25,000 which is nothing to write home about - considering the hype!
CONFLICT OF INTEREST:
Perhaps there is a *conflict of interest* since transaction advisors, being brokers also, know that they will gain more commissions in a volatile secondary market if the number of speculative shareholders is very high! The buy-hold investor is not a stock broker's friend!
REFUND TRANSACTIONS:
Then the number of refund transactions in case of a massive oversubscription will be *mind boggling* - and an unnecessary waste of resources and funds (due to expenses incurred)!
OBJECTIVE ALLOCATION CRITERIA:
IPOs should only be targeted at serious investors - not speculators! The allocation structure should aim to minimize the chances of massive post-IPO refunds which are detrimental to the economy (idle capital).
We need sanity and stability in the secondary market. Considering the high value of the company and the need to minimize refunds, the shares should cost approx 50 bob each and the minimum *value* of shares bought during the IPO should be 100k-200k.
INVESTMENT GROUPS:
This will force jua kali investors to form organized investment groups and minimize risk of instability at NSE due to excessive speculation typically associated with such investors.
HIGH NET WORTH INDIVIDUALS:
We also need to consider "High Net Worth" investors as separate from corporate investors. E.g. our MPs and people like Chris Kirubi.
Minimum allotment for such individuals should be 1-2 Million shillings per shareholder.
ETHICS
The transaction advisors are being paid to do a job - let them do it properly - without turning the IPO into a future commissions cash cow for their own benefit!
SAFARICOM IPO: BROKERS WANT TO TURN IT INTO A COMISSIONS RIP-OFF!
The mass market push by stock brokers is a scam. All they want is to get as much commissions as possible AT THE EXPENSE OF ORDINARY KENYANS.
Transaction advisors have major conflict of interest. They have to recover expenses related to their 5 cents contracts. The only way to do that is to have a large number of speculative and uninformed "investors" who will keep the comissions pouring in.
Keep in mind - the brokers get paid for both buy and sell transactions. The more speculation and instability the better for them!
The argument about kenyans sharing a piece of the "cake" is totally flawed and is meant to appeal to the "get-rich-quick" mentality of uninformed Kenyans.
Any windfalls will not be significant and grim reality will strike misled kenyans when the initial excitement goes down.
If the IPO targets the masses - ONLY THE STOCKBROKERS WILL GAIN.
This is a potentially massive scandal - and no one is seeing it!
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