Kenya’s Safaricom IPO Stalls As State Awaits the Go-Ahead

Mergers, Acquisitions and Financial Results

Regulators have not approved a Government plan to sell a portion of its stake in Safaricom, signalling that the offer is unlikely to be in the market by the end of this month as earlier planned.

People familiar with the matter said this and the drop in investor confidence following the recent outbreak of post-election violence has stopped the transaction on its tracks, throwing the advisors back to the drawing board. Treasury officials, transaction advisors and Safaricom executives have since last week indicated that not much had been done on the planned sale since the year began.

"Nothing much has happened, we are still where we were in December - waiting for approvals," said Mohammed Hassan, the joint chief executive officer at Dyer and Blair Investment Bank, which is part of a consortium that is advising the Government on the deal.

He said the release of the IPO timetable would depend on how fast the approvals were granted and investor confidence. The IPO requires approvals from the Capital Markets Authority (CMA), the Nairobi Stock Exchange (NSE) and the two shareholders - the Government and the British telecom giant Vodafone.

Treasury plans to sell 25 per cent of its 60 per cent stake in Safaricom to the public through the NSE. Vodafone holds the remaining 40 per cent. Since political violence broke out over the tallying of the presidential vote a month ago, the stock market has taken a beating with most shares trading below their true value mainly because retail investors, who happen to be the main target of the movers of the Safaricom offer, exited the bourse for fear of taking huge losses.

Safaricom chief executive, Michael Joseph, had earlier indicated that the IPO would happen in mid-February, arguing that investor interest on the offer was high despite the political violence.

He has, however, climbed down, saying the IPO timetable was unknown. "I am sorry I do not have any new information for you," he told the Business Daily when asked for an update on Monday.

Business Daily