Like other Kenyans, I am proud of our country's cooperative movement, which is a shining example around the world. And I am proud of the Cooperative Bank of Kenya (CBK), a state institution which had its IPO only last December. Before the IPO, only cooperative societies had a real chance of buying CBK shares in bulk. For retail investors, there was one over-the-counter route to obtaining CBK shares, for a good number of years. This was what is now Suntra Investment Bank, which is presently weakened by scandal of huge proportions.
I have just had a look at CBK's Annual Report and Accounts for 2008, which has just been released. I am talking in particular of pages 144 to 146, which, thanks to an aspect of Kenya's corporate law, obliges the bank and other publicly quoted companies to show the distribution of shares among the bank's top 10 shareholders, the bank's own Directors, and different categories of the bank's shareholders. If you peruse those pages too, you will, as I do, smell a rat that stinks to high heaven.
CBK has a total of 3,492,369,900 issued shares, and a total of 116,068 shareholders. That averages at 30,088 shares per shareholder, regardless of category. More importantly, Kenyan individual shareholders own 939,112,300 shares, and there are 112,774 of them. This averages at only 8,327 shares per Kenyan individual shareholder. Alas, among CBK'S seventeen Directors (who own a total of 138,995,700 shares), the average is a staggering 8,176,217 shares (that's more than 981 times the number owned by the average Kenyan investor).
In fact, if you compute the average for Kenyan individual investors without including the shares held by the Directors: the total number of shares held by Kenyan individuals (non-directors) drops to 800,116,600 shares, and the average among the 112,757 of them drops to 7,095 shares per individual (which is 1,152 times less than the average for the Directors).
We can look at the directors' allocations to themselves in even starker light, as follows:
1. The Managing Director owned, as at the end of December 2008, a total of 68,121,000 shares.
2. The Chairman of the Board owned 8,000,000 shares
3.The Vice Chairman owned 7,700,000 shares
4. The Company Secretary owned 5,090,000 shares
5. The Commissioner of Cooperatives owned 2,750,000 shares
6. Five other Directors also owned just over 5 million shares each
7. Three other Directors owned exactly 5,000,000 shares each
8. One Director owned 2,750,000 shares
9. One Director owned 2,310,000 shares, and another owned 2,300,000 shares
10. The "poorest Director", representing the Permanent Secretary at the Ministry of Finance, owned what you may call a "token" of 1,000,000 shares! [Currently each share sells at around KES 6.50, or US$0.083]
The circumstances under which these stupendous amounts were allocated and paid for require a forensic investigation. The Directors should step aside while this happens, for, clearly, there has been no transparency here. Previous annual reports of the company may suggest where these shares came from over the years. For at least a couple of years after the bomb blast, annual reports showed significant amounts of issued shares, without explanation as to who was receiving them. The public has reason to need to know now. At the SACCOs, and at the bank's registry, officials did not seem to ever know that additional shares were being made available each year for purchase by members. What Suntra did over the counter, as far as one knew, was to match retail buyers and retail sellers who had owned their shares for some time, perhaps even since before the bomb blast, which nearly reduced the bank to a rubble, in August 1998.
The shares previously held by individual cooperative societies, amounting to 64.56% of the total, were (wisely in my view) grouped together, just before the IPO, under a corporate entity called Co-opholdings Co-operative Society Ltd. This ensured, and still does, control of the bank by the country's cooperative movement. However, the then acting Minister for Finance, John Michuki, issued a strange edict prior to the IPO which keeps secret for some five years or so the identities of the societies (and perhaps other "entities") brought together under that corporate entity. Let us hope that there are not even more rats under cover there. Five years may be too long to find out the truth!
Showing posts with label IPO. Show all posts
Showing posts with label IPO. Show all posts
Friday, May 29, 2009
Monday, March 23, 2009
The Kisumu Molasses Company
Today's dailies report that Raila Odinga, Kenya's PM, has pledged that members of the public who contributed shares to the molasses plant (close to twenty years ago!), will be allocated shares "once we are listed in the stock exchange." My guess is that listing will not take place any time soon; certainly not before the 2012 General Elections (I don't think Uhuru Kenyatta, who as Finance Minister has a say, will countenance that), and probably not before 2017 (or even 2020, or even 2030). So, if there was any cheering at the Tom Mboya Labour College where the announcement was made, who's kidding whom?
The bigger question, though, is this: What makes Raila Odinga think he's the one to decide when -- or, as has clearly been the case to-date, if -- co-shareholders of the molasses plant are to be allowed into the company, to share in the olemo with the Odinga family?
On page 20 of the busiess section of Daily Nation of March 23, 2009, Raila himself reveals that: "Locals contributed Sh 1.7 billion and a developer (Spectre International) brought $15 million (Sh 1.2 billion). This enabled the moribund plant to get on its feet." Does that not give "locals" a controlling 58.62% of the company? Instead of the Odinga family, shouldn't they, and those who set up the company prior to its becoming moribund, be calling the shots?
A pertinent point here is this: The Luo have no royal family, and never had! Just imagine what Kikuyus would have thought of James Mwangi if he had adopted the same selfish attitude with respect to the founding shareholders of what is now the giant Equity Bank -- in which I myself have a very few shares!
Yes, we can blame past governments for Nyanza's backwardness; but the condenscending attitude displayed by Raila over the weekend is very much part of the reason Nyanza continues to stagnate and whine in despondency. In effect, the buck stops with him. Increasingly, the electorate is restless in the face of this perpetuity -- which is worse in many ways than the impunity everyone is talking about these days. This is impunity squared; and the joke is in the absence of detail and credibility.
The only silver lining I see in the pronouncement is that the intense pressure on the Odinga family by grass-roots Luo is finally having some effect. But promises will not do; nor will passing the buck to the usual "bogeymen".
And then there is the historic injustice personified by the Luo Thrift Union. When will that be addressed? This was no Mbi-I-Kamiti, nor Nyakinyua, nor those many group land-buying companies that Central Province is so well known for.
If you ask me, the share allocation at Kisumu Molasses Company should have been effected at least a decade ago. In fact, subscribers should as a matter of course already know how many shares they have, and should already be co-beneficiaries of any dividend distribution so far authorized and made. They should not be treated like other retail investors who might wish to scramble for "peanut" share allocations during a promissory IPO which may not come in the lifetime of many in the rapidly aging and permanently deprived "cheering crowd" of Nyanza.
The time to allocate the shares is now, long before the 2012 election frenzy; and this does not require NSE listing. This should be the kind of gonywa Nyanza electors should be shouting about. The time to get serious is now. The people want to concentrate on development. It is the politicians who will not put politics aside. The people are not perpetually running for president, it is Raila who is -- clearly not satisfied with being Prime Minister. Perhaps we should bite the bullet and keep the "Premiership" out of the constitution. Out, out, kabisa. It does not seem to be doing anyone any "real good" (power-wise), least of all Raila.
The bigger question, though, is this: What makes Raila Odinga think he's the one to decide when -- or, as has clearly been the case to-date, if -- co-shareholders of the molasses plant are to be allowed into the company, to share in the olemo with the Odinga family?
On page 20 of the busiess section of Daily Nation of March 23, 2009, Raila himself reveals that: "Locals contributed Sh 1.7 billion and a developer (Spectre International) brought $15 million (Sh 1.2 billion). This enabled the moribund plant to get on its feet." Does that not give "locals" a controlling 58.62% of the company? Instead of the Odinga family, shouldn't they, and those who set up the company prior to its becoming moribund, be calling the shots?
A pertinent point here is this: The Luo have no royal family, and never had! Just imagine what Kikuyus would have thought of James Mwangi if he had adopted the same selfish attitude with respect to the founding shareholders of what is now the giant Equity Bank -- in which I myself have a very few shares!
Yes, we can blame past governments for Nyanza's backwardness; but the condenscending attitude displayed by Raila over the weekend is very much part of the reason Nyanza continues to stagnate and whine in despondency. In effect, the buck stops with him. Increasingly, the electorate is restless in the face of this perpetuity -- which is worse in many ways than the impunity everyone is talking about these days. This is impunity squared; and the joke is in the absence of detail and credibility.
The only silver lining I see in the pronouncement is that the intense pressure on the Odinga family by grass-roots Luo is finally having some effect. But promises will not do; nor will passing the buck to the usual "bogeymen".
And then there is the historic injustice personified by the Luo Thrift Union. When will that be addressed? This was no Mbi-I-Kamiti, nor Nyakinyua, nor those many group land-buying companies that Central Province is so well known for.
If you ask me, the share allocation at Kisumu Molasses Company should have been effected at least a decade ago. In fact, subscribers should as a matter of course already know how many shares they have, and should already be co-beneficiaries of any dividend distribution so far authorized and made. They should not be treated like other retail investors who might wish to scramble for "peanut" share allocations during a promissory IPO which may not come in the lifetime of many in the rapidly aging and permanently deprived "cheering crowd" of Nyanza.
The time to allocate the shares is now, long before the 2012 election frenzy; and this does not require NSE listing. This should be the kind of gonywa Nyanza electors should be shouting about. The time to get serious is now. The people want to concentrate on development. It is the politicians who will not put politics aside. The people are not perpetually running for president, it is Raila who is -- clearly not satisfied with being Prime Minister. Perhaps we should bite the bullet and keep the "Premiership" out of the constitution. Out, out, kabisa. It does not seem to be doing anyone any "real good" (power-wise), least of all Raila.
Saturday, January 13, 2007
IPOs and Kenyan Politicians
Kenyan politicians must root for the small investor. It is in their best interest. There are now over 500,000 such investors. By election time later in 2007, their number will probably have reached 750,000, particularly with the expected Safaricom IPO. Most of these are young Kenyans, and there is a growing number of women -- who refuse to be left behind. Their recent involvement in the stock market will be one potent reason for them to vote one way or another at the next general elections. They will at last have something very tangible to protect, something directly and personally beneficial to them.That’s a lot of votes to lose, for those who rub them the wrong way!
The small investor is a very determined and perceptive lot. Determined because the poverty line gives them nightmares, and they are driven to stay above it – well above. Perceptive in that they have discovered two things. First, that a well managed stock market offers them the most promising opportunity for asset-building, on a scale which no politician has offered them since the heyday (some decades ago now) of land-buying groups; and for staying above the poverty line despite widespread neglect by politicians. And they know that group land-buying, part of the old ethnicity, was essentially a kitchen cabinet project which politicians in many parts of the country did not have the motivation to emulate or counter -- and no discernible inclination to match for the benefit of their own constituents, as opposed to their own personal gain!
Second, that there is real “magic of compounding” in the stock market which politicians, themselves a perceptive lot, have all along known about and quietly enjoyed but which, left to their own devices, would rather not share with wananchi. We say: Keep this gate open! Share the planet!
It is one thing to fault the 2006 IPOs on the grounds that, starting with the “book building”scam attempted during the KenGen IPO, efforts were made to favour institutional investors (and some efforts succeeded, particularly in subsequent IPOs); or to query the mystery and illegal 5% holding by a third party in Safaricom; or to take measures to ensure that CMA and NSE do not “even think about it” in 2007 and beyond. But it is quite another and dangerous thing to make blanket statements of intention to repossess for the state, presumably by executive order or through a parliamentary vote, the shares which investors bought in 2006. Repossess and then do what? This would clearly be a case of repossess and dispossess. Dispossess for whose benefit?
In an election year, in which the margin of victory is unlikely to be larger than that witnessed during the 2005 referendum, it is highly risky and probably political suicide to make 750,000 individual investors highly nervous about the future of their hard-won, and now compounded, assets; or about the future of IPOs in general. Individual (or “small-holder”) shareholding is beginning to acquire the characteristics and passions of a new ethnicity, politician beware. It is a passion, indeed, that is sweeping the whole world – including the ex-communist states of China and Russia.
The small investor is a very determined and perceptive lot. Determined because the poverty line gives them nightmares, and they are driven to stay above it – well above. Perceptive in that they have discovered two things. First, that a well managed stock market offers them the most promising opportunity for asset-building, on a scale which no politician has offered them since the heyday (some decades ago now) of land-buying groups; and for staying above the poverty line despite widespread neglect by politicians. And they know that group land-buying, part of the old ethnicity, was essentially a kitchen cabinet project which politicians in many parts of the country did not have the motivation to emulate or counter -- and no discernible inclination to match for the benefit of their own constituents, as opposed to their own personal gain!
Second, that there is real “magic of compounding” in the stock market which politicians, themselves a perceptive lot, have all along known about and quietly enjoyed but which, left to their own devices, would rather not share with wananchi. We say: Keep this gate open! Share the planet!
It is one thing to fault the 2006 IPOs on the grounds that, starting with the “book building”scam attempted during the KenGen IPO, efforts were made to favour institutional investors (and some efforts succeeded, particularly in subsequent IPOs); or to query the mystery and illegal 5% holding by a third party in Safaricom; or to take measures to ensure that CMA and NSE do not “even think about it” in 2007 and beyond. But it is quite another and dangerous thing to make blanket statements of intention to repossess for the state, presumably by executive order or through a parliamentary vote, the shares which investors bought in 2006. Repossess and then do what? This would clearly be a case of repossess and dispossess. Dispossess for whose benefit?
In an election year, in which the margin of victory is unlikely to be larger than that witnessed during the 2005 referendum, it is highly risky and probably political suicide to make 750,000 individual investors highly nervous about the future of their hard-won, and now compounded, assets; or about the future of IPOs in general. Individual (or “small-holder”) shareholding is beginning to acquire the characteristics and passions of a new ethnicity, politician beware. It is a passion, indeed, that is sweeping the whole world – including the ex-communist states of China and Russia.
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