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ContactSafaricom goes IPO...
30th of March 2008
AVI Safaricom Block - Investment terms:AVI is pleased to offer the AVI Safaricom Block to our current clients and other interested retail investors. Through our relationship with Dyer & Blair, a premier Kenya investment bank and co-advisors to Safaricom (along with Morgan Stanley), we have been guaranteed a block of 3 million shares, ~ 250K USD in the upcoming Safaricom IPO listing. Safaricom IPOSafaricom is the premier mobile operator in Kenya, accounting for over 80% of total mobile subscribers in the Kenyan market. The company is currently 60% owned by the Kenyan Government through Telkom Kenya (a wholly owned government institution) and 40% through Vodafone. The government has announced plans to sell of 20% of its stake through an e-IPO slated to open on March 28th and close by April 23rd. The offer will list 10 billion shares, 65% to East African investors at 5 Ksh per share, and the remaining 35% to international investors at a book building market price to be determined by the offer date. The Safaricom IPO has been received with a lot of enthusiasm by both domestic and international investors alike. Recent listings by other Kenya firms, such as Kengen the utility provider, have led to outstanding returns of over a very short period of time. In addition, Safaricom is the most profitable company in East Africa, and a consistently strong performer, growing over 20% per annum on all key operating dimensions. Details on their performance can be found in the Safaricom prospectus. AVI Safaricom Block - Investment terms:
¶ Offer price of 5 Ksh per share (~0.08 USD per share at the current exchange rate of 66 Ksh to 1 USD) plus a premium of 5% admin fees to AVI. AVI will also charge a back end 5% at disposal of shares thereafter.
¶ Minimum investment of 50,000 shares per entity¶ Shares will be allocated on a first come first serve basis. Investors will receive confirmation of amount they have been allocated within 24 hours of receipt of their funds.¶ Offer opens March 31st and closes April 10th. All funds must be received by the closing date of April 10th. An early close is part of the requirements for our guaranteed allocation – please ensure transfer requests are done in a timely fashion to ensure your funds arrive by the 10th of April.¶ Amount invested will be net received after banking charges/transfer fees have been netted out, and using the prevailing exchange rate. ¶ A notice will be provided to all investors once share certificates have been received and trading can commence. Investors can send a mandate to trade their shares at anytime after certificates have been received. Please note that actual time of sale will be dependent on market factors – i.e. demand and supply at that time in the market.¶ Net proceeds, after paying broker commissions (between 2 – 3%), bank transfer fees, and converting to US dollars at the prevailing exchange rate, will be sent to return account details specified by Investor at that time. AVI Value Proposition:¶ Guaranteed allocation: AVI’s block of 3 million shares, guarantees investors will be able to secure their requested amount, on a transparent first-come, first-serve basis. This shields our investors from the oversubscription syndrome, where they get significantly less shares than they requested, and their monies remain idle during the long drawn-out refund process.¶ Reliability: Our experience in funds management across multiple African countries puts us in good stead to manage this transaction effectively. In Kenya, our longstanding relationship with Dyer & Blair, assures our investors of a reliable stockbroking firm to partner with.¶ Logistical support: We shield our investors from the administrative burden of dealing with multiple parties during the transaction process. AVI will be your ‘local’ interface, managing the paperwork, purchase, eventual sale, and transmission of funds back to your account. Key Risks¶ Excessive supply of shares: Safaricom will introduce 10 billion new shares into a market that has a cumulative total of 14 billion shares. Questions exist to the market’s ability to handle this new capacity, and the potential excessive liquidity that could exist in the system post IPO.¶ Exchange rate fluctuations: Kenya Shillings could experience fluctuations against the dollar over the next few months given the recent political situation in the country. However, the exchange rate has slightly strengthened against the dollar during the last week, buoyed by the Safaricom IPO announcement and the foreign funds expected to flow into the country as a result.¶ Delay in obtaining share certificates: – Processing of applications has traditionally led to long delays of receiving share certificates, even when the stock has started trading on the exchange. However, the e-online process should quicken the process, and enable investors to quickly become active traders. ¶ Fraudulent Brokers: Recent allegations on irregular sale of shares by Nyaga Stockbrokers, a Kenyan stockbroker with over 130,000 accounts, has led to concerns about the credibility of stockbrokers in the Kenyan capital market. This is coming up on the hills of the demise of Francis Thuo & Partners, another stockbroking firm, and recent trading bans on four other stockbrokers. Next StepsInterested parties should send in a signed application form and transfer their funds to the AVI account by April 10th. Application form is attached with this note. For further questions/enquiries, please contact info@avi-investors.com We will respond within 24 hours of receiving your email.
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