Commentary: Safaricom IPO

Everyone is waiting with great anticipation for the Safaricom IPO, expected sooner or later this year. Watu wanajitayarisha!

We at SharePlanet are going to be saying a lot in the coming days and weeks about the IPO, and others to follow.

For now, we wish to add our voice to the view that the offer must be large enough to satisfy the huge, even pent-up, demand for good, affordable stock among ordinary Kenyans.

Let us be bold about one thing: The Safaricom IPO must involve at least 3,000,000,000 ordinary shares, and preferably up to 5 billion shares. Only such a volume has the potential to mop up all the liquid cash flowing around from one small IPO to the next, as we all witnessed in 2006. The offer price must be pocket-friendly as far as the retail investor is concerned.

Let us be bold about another thing: priority must be given to retail investors -- to individuals applying for shares on their own, or even jointly. In reality, Safaricom is their creation. Safaricom cannot thrive simply on the goodwill of corporate entities.

Corporate entities claim to be legal persons, and to demand their own rights. Fair enough. In that case, however, let them be treated the same way as individual investors, in all respects -- not more, certainly, and not less.

The recent attempts, subtle and crude, to tilt allocations in favour of institutional investors have not escaped attention. The public will not stand for their continuation in 2007! After all, many of the so called "institutional" investors are little more that "a fistful of 'incorporated' individuals." Others, such as mutual funds, are essentially companies, typically controlled by a few, which have proceeded to attract into their fold, and to hide behind, "bundles" of elite individuals who can afford to open accounts with Kshs. 200,000 to Kshs. 500,000/-.