NAIROBI, May 31 (Xinhua) -- Kenya's initial public offering of Kenya's largest mobile service provider, Safaricom was oversubscribed by 532 percent by both local and international investors.
Finance Minister Amos Kimunya said on Friday night that local investors had earlier been allocated 65 percent of the 10 billion shares on offer. Thousands of small investors applied for a piece of Kenya's most profitable company.
Kimunya said after reviewing the applications, foreign investors would receive only 15 percent of the 10 billion shares sold, although they had been earlier assigned them 35 percent.
"We have clawed back 15 percent of shares from the international investors because there was a proviso to claw back the international pool in the event that the local pool was oversubscribed by over 200 percent or in the event that the international price was equal to the local price," Kimunya said.
"The demand is beyond the equity value of the company of 200 billion shillings at the offer price of 5 shillings per share. It represents a subscription rate of about 532 percent and is a positive endorsement by Kenyans," said Kimunya.
East African retail and institutional investors would take the rest, bringing the issue's value to 51.75 billion shillings although it had raised demand worth over 226 billion shillings.
"Although we expected an oversubscription, we did not anticipate the kind of response we have witnessed. The shares on offer were worth 50 billion shillings at the offer price of 5 shillings per share," the minister told a news conference in Nairobi.
"Investors have come back to us with aggregate demand in excess of 226 billion shillings (160.6 billion shillings from local investors and 76 billion shillings from international investors)," he said.
Kimunya said the IPO was able to successfully introduce the book building approach to pricing IPOs, price the international pool at a premium to the local offer price and attract a large number of leading global investors.
The retail investors would receive only 21 percent of what they had applied for while institutional buyers and international investors would get a paltry 31 percent and 15 percent of what they bid, respectively.
"Safaricom employees would receive 84 percent of what they applied for while Safaricom dealers will receive 31 percent of what they bid," the minister said.
"The Treasury and Privatization Commission concluded that the level of demand at the clearing price would ensure that the government realized its goals of maximizing revenues while ensuring adequate after market support for the stock after the commencement of trading expected on June 9 2008," he said.
Following the IPO, the public will hold 25 percent of the issued ordinary share capital of Safaricom, with the government holding 35 percent and Vodafone Kenya 's shareholding remaining unchanged at 40 percent.
Both the government and Vodafone Kenya have agreed not to sell any further shares for a period of at least 180 days following the IPO.
The government said foreign investors will pay a 0.5 shilling premium per share over the 5 shillings that domestic investors will be paying.
"This represents a 10 percent premium to the local offering price, an unprecedented structure and premium level when compared to past transactions around the world," Kenya's privatization commission said in a statement.
The government is offloading a 25 percent stake in the mobile phone operator, one of Kenya's most profitable firms, and expects to earn at least 50 billion shillings from the initial public offering.
