Safaricom Shares Surge As Trading Starts in Nairobi

Shares in the massively oversubscribed Safaricom floatation soared when trading opened this morning on the Nairobi Stock Exchange. Share were sold to domestic investors at 5 shillings each (with 5.5 shillings for overseas investors) and jumped by 45 percent to reach 7.4 shillings by lunchtime - having at one point reached 8 shillings during the mornings trade.

Safaricom now comprises some forty percent of the volume of the Nairobi Stock Exchange after the 10 million shares sold by the government.

"The price is going to rise further today," Fred Mweni, managing director of Tsavo told Bloomberg News in an interview in Nairobi. "Investors who weren't allocated the full amount they sought in the IPO will buy more shares," he said.

Last month, Safaricom reported a 16 percent jump in full year profits to Sh13.9 billion ($223.7 million) as its declared subscriber base jumped by two-thirds. Pretax profit came in at Sh19.9 billion ($321 million). Sales jumped to Sh61.4 billion, from Sh47.5 billion as subscriber numbers rose by 68 percent to 10.2 million at the end of March 2008.

Preliminary figures released in April from the government's sale of the shares pulled in some Sh191 billion (US$3.3 billion) in bids from local and international investors - substantially exceeding the expected Sh50 billion (US$845 million) that government had hoped to raise.

Following the floatation - the Kenyan government will own 35% of Safaricom, 25% will be floated on the stock exchange and 40% will be held by Vodafone Kenya Ltd - which in turn is 87.5% owned by Vodafone Group and 12.5% owned by the mystery company, Mobitelea.

Both the Government of Kenya and Vodafone Kenya Limited have agreed not to sell any further shares for a period of at least 180 days following the privatisation.

On a pan-African basis this has been the third largest floatation after those of Maroc Telecom and Telecom Egypt.

Posted to the site on 9th June 2008