KENYA: Shares in the Kenya Electricity Generating Company (KENGEN) close at nearly four times their issue price after the utility's market debut

Record ID: 363022

  • Title: KENYA: Shares in the Kenya Electricity Generating Company (KENGEN) close at nearly four times their issue price after the utility's market debut
  • Date: 17th May 2006
  • Summary: WIDE SHOT OF NAIROBI STOCK EXCHANGE TRADING AREA
  • Embargoed: 1st June 2006 13:00
  • Keywords:
  • Location: Kenya
  • Country: Kenya
  • Topics: Economic News,Energy
  • Reuters ID: LVA88WLIORUKCEB455NK92OJ10PN
  • Story Text: Ordinary Kenyans pushed and shoved their way to witness Kenya's biggest ever public listing, while frantic stockbrokers shouted buy and sell orders at the Nairobi bourse on Wednesday (May 17).
    Interest in shares of electricity producer Kengen, privatised earlier this year, gripped Kenyans from capital Nairobi to the tiniest country villages this week ahead of the listing.
    Newspapers reported famers selling cows to raise money to buy the shares.
    Local interest in Kengen shares received a boost after the intitial IPO (initial public offering) was nearly four times over-subscribed, with heavy international buying. Africa's five percent growth in 2005, with nearly six percent predicted over the next two years, has begun attracting increasing numbers of investors from outside the continent.
    African bourses outpaced stock markets in any other region in 2005, bringing rich rewards for those brave enough pump money into what has historically been regarded as a very high risk arena.
    Shares in Kenya Electricity Generating Company closed at nearly four times their issue price after the company's market debut.
    "This was a share with tremendous demand and that was proven by the fact that we raised 26 billion Kenya Shillings for an issue of 7 billion Shillings," said broker Kiibe Kariithi. "As an investor, this is a very good gain, as you can see already you have gained 400%. I think that what one can expect, it could be higher but that's a good return for such an investment," said investor Bob Karina.
    The shares closed at 40 shillings compared with an issue price of 11.90, putting a market value of 87.9 billion shillings (1.2 billion U.S. dollars) on the company which produces 80 percent of the east African country's total electricity capacity of 1,060 megawatts (MW).
    The stock was bid as high as 62 shillings before trade began amid shouts of brokers in red jackets and bourse officials scribbling down prices in the open-outcry market.
    The government has raised 7.8 billion shillings by floating 30 percent of KenGen, in the country's first privatisation since President Mwai Kibaki's ruling coalition came to power in 2002 on a platform of economic reform.
    The IPO attracted demand of more than three times the 659.5 million shares on offer, which market players say may encourage the government to return with a secondary offer soon.
    While some investors thought the price had moved too high, too soon, others clearly thought the share had room to move higher.
    The government placed the minimum subscription at 500 shares with a discounted price of 11.90 shillings to attract as many ordinary Kenyans as possible to the IPO.
    Despite the listing's success in a market lacking in new securities, market players said the IPO exposed weaknesses in the local capital markets, with pricing and liquidity being the biggest challenges.
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