12 Nairobi Star Monday, 14 July 2008

BY PETER KIRAGU

Stockbrokers have come out fighting to salvage their reputation that was hugely dented after the Safaricom IPO and by the way they handled the refund process.

According to the Associa-tion of Kenya Stockbrokers chief executive Jane Njeru, the confusion witnessed during the IPO and its after-math was because brokers were not adequately con-sulted before and after the IPO.

While more than 750,000 investors threw in their nets for a share in the most prof-itable company in Kenya and the region, most of them were overly disappointed by the allocation criteria that resulted in retail investors getting only 20 per cent of what they had applied for.

The situation was further worsened by the confusion that followed the refund process. As a result, thou-sands of retail investors and who coincidentally were try-ing their luck at the stock market for the first time, appear determined to say goodbye to this unfamiliar territories, maybe forever.

“These delays have dented the motivation of the Ken-yan investor to place their money in the Nairobi Stock Exchange, and this needs not happen again” Njeru said last week.

“As Kenyans adopt a wait and see attitude, one thing is for sure; no one wants to ever queue for so long again to receive their refund cheques in any future IPO or rights issue for that matter.

She said there was need for a more inclusive proc-ess for future IPO’s where all the stakeholders are

widely consulted to ensure a smooth process. “Our mem-bers are indeed willing to of-fer their expertise and advise through all-inclusive round table consultations in all fu-ture IPO’s and by so doing, transform and strengthen the stock market.”

And with all indications that the Cooperative Bank of Kenya IPO will be launched anytime now, there is need to restore confidence in the stock market if the issue is going to succeed.

The Co-op IPO has al-ready received all the nec-essary approvals including that of the shareholders, the NSE, the Central Bank of Kenya and the Capital Mar-kets Authority. The bank wants to raise Sh10 billion

from the issue to finance its expansion programme.

Nevertheless, Njeru who heads the secretariat that brings together all the 18 licensed stockbrokers in the country is confident that the future is bright for other IPOs. But she concedes that the credibility of her mem-bers has been greatly dented perhaps more than ever by the Safaricom issue.

She said most of this mis-trust has come as a result of misinformation about stock-brokers’ activities.

“Claims that the brokers were trading with refund cheques of the investors is one of the falsehoods that were peddled by people who have little or no under-standing of the NSE,” Njeru

says. But even as brokers have drawn all their swords ready for war, they will have to do a lot of homework and confidence building go-ing forward especially now that commercial banks have proved that they can also of-fer brokerage services and at a more organised manner.

While for instance most stockbrokers and investment banks took weeks before processing and settling in-vestors’ refunds, some banks like Equity Bank started dis-patching the refunds on the very day that was stipulated by the IPO’s prospectus.

For now though, what is so clear is that the battle of wits between brokers and banks is not going to come to an end soon.

BY TIMOTHY MUNUKU

MOI University is the winner of inter-varsity entrepreneur-ship competition.

Moi beat 13 other teams to emerge the best in the 2008 National Entrepreneur-ship Competition, Students in Free Enterprise (SIFE). The university beat two-year reigning champions Nairobi University’s SIFE team, earn-ing the opportunity to repre-sent Kenya in the World Cup set to be held in Singapore

in three months’ time. “This gives a great opportunity for Kenya as the students will market the country in an international forum,” said James Shikwati, the Country Director for SIFE-Kenya. “The team will be required to highlight Kenya’s economic trends.”

Shikwati says that busi-nesspeople need to utilise the energy of university students, through partnership, in in-creasing entrepreneurial busi-ness skills among community

members. At the competition, Moi University presented its projects it has undertaken, which included imparting financial and success skills to children in schools surround-ing the university and also a waste management project, carried out in partnership with youth groups in El-doret’s Huruma estate.

“Our main objective is to increase the capacity of peo-ple to sustain themselves,” said Simon Kirigua, Moi University’s SIFE President.

iNcoNveNieNce: Retail investors had to queue for hours before and after IPOs.

tough: SIFE presentation.

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Aly-Khan Satchu www.rich.co.ke is the author of Anyone Can Be Rich, available in local bookshops

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THE REAlREASON BEHINd

RISING OIl PRIcESI have traded Crude Futures for many years. When I was in Mombasa, I had to build a 110 ft tower [My Father asked if I had started prospecting for oil!] to ensure I had permanent internet connectivity because its continuous 24-hour market and events could lead to extraordinary spikes or declines.

everywhere I turn, I note fuel prices have now pole vaulted the Sh100 a litre mark and frankly, look unlikely to come down anytime soon.

Last Friday Oil jumped as high as $147.27 a barrel in New York which is a new all time record.

higher prices have caused substantial demand destruction in the Western economies. americans, for example, drove 1 billion less miles in May, this year.

house prices in the suburbs are selling off as folk now factor in the fuel bill, before they move.

however, it is clear that the cratering in US demand is having little overall effect as China and the emerging economies more than offset the Western reduction in demand.

We have a market which appears to have passed a tipping point in the supply and demand equation.

Speculators are being blamed for the run up and governments are looking for any scapegoat they can find to blame. Certainly, more money is

being invested in oil and commodities and that is what free markets are about.

The real reason for the unprecedented recent surge is this. Crude oil prices reflect geopolitical tensions. We have a very tight market as it is. In the last ten days, the Israelis completed a military exercise with 100 F15 Jets on the eastern Meditarranean and clearly designed to send a powerful message to Iran that they were considering attacking Iran’s nuclear assets.

The Iranians responded by firing missiles capable of reaching Tel aviv. Forty per cent of the world’s oil passes through the Straits of hormuz and Iran have confirmed they will choke this off.

Now, Crude is accurately reflecting the fact that the consequences of such an attack on Iran are impossible to model. If any attack takes place, we might well trade over $200.00.

For a Country such as ours, which entirely imports its oil, you can understand why the shilling is sliding; our import bill is surging every month.

The world is a village and we need to come up with some grown up solutions.

Brazil have legislated that 30 per cent of the fuel blend you use has to be ethanol. What are we waiting for?

Shares go up and down and readers are advised that this column represents Mr Satchu’s personal opinions.