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.
Did anyone read the Kenya Police tender notice in the Daily Nation on this Thursday 6th ?I did and one of the items they tendered for was :equpiment to analyse exhaust fumes to be delivered to the Vehicle Inspection Unit.
Given that a lot of senior Government officials have been talking about vehicles that smoke from their exhausts its safe to guess this is the new "Alcoblow".
But they may have to ammend the Traffic Act because the Act only outlaws visible smoke. Its silent on the chemical composition i.e. the level of nitrous oxides, particulates, CO2..etc
So if you have a smoky junk ,repair it now or you wont be able to drive it next year when the Government brings the new rules into effect.
NAKUMATT: THE IPO................sooner than you think
Nakumatt has been in the headlines for the past couple of weeks for all the wrong reasons. I'm sure by now the owners of Nakumatt know why Charles Njonjo has big stakes in listed companies like CFC Holdings or CMC, while Total man(Biwott) has his flagship investment in a comapany(Kenya Oil Co.) which is only 20% owned by the public listed on the Nairobi Stock Exchange.
On the other hand Meralli tries to list or co-own, his major investments with influential personalities.e.g. the MD at SASINI is a former high ranking civil servant.The other rich Kenyan, Mr. A.S.M. Ndegwa of First Chartered Securities, keeps an ultra- low profile.
The reason all this men behave the way they do is that they have learnt what all rich men have known upto and before John D. Rockefeller have known- "Everybody wants to be rich but nobody likes a rich man"
Yukos learnt this the hard way when President Putin seized and sold its assets.By listing a tiny stake of their assets the large investors get thousands of small shareholders , who not only ask stupid questions at AGM's but provide protection against Governments and individuals who want to aquire their assets unfairly.
Imagine the furore if the Government attemted to shut down CFC Bank or take-over Kenya Oil. All those shareholders who rush for the free packed lunch at the AGM will be at Nation Centre protesting. The sound bites that they will be giving the TV stations won't be pleasing at all to the Governmet which is headed by elected representatives(M.Ps). Of course, no Government would proceed with an unpopular course of action. So such institutions are protected from arbitrary Government actions.
For Nakumatt, to get protection against future State actions, they need to list a sizeable stake of the firm on the Stock exchange. Failing so, you will hear more 'revelations' in another couple of years. My bet is that the Nakumatt owners being smart ones have thought the above scenario through and will list Nakumatt in the next 36 -48 months.(i'm willing to bet on this).