There is so much excitement about the Safaricom shares. Majority of Kenyans want to cash in on this one. The question most experts are asking silently is will Safaricom shares have a big capital gain as most people expect them to be? Even the banks have joined the bandwagon giving loans right and center for the Safaricom IPO. Well banks and bankers are tricky combination and they know how to twist the arms of those running to them in case of unexpected occurrence and therefore it should be a discussion for another day. The tricky part is that most people are going to the market now and they are ready to sell immediately the shares go to the trading floor. On top of that 10 billion shares might be too much for the local market to handle unless we have big influx of international investors which might not be possible due the current political stand off. So on that first day everyone will be ready to click on sell button but who will be buying? This is one million dollar question which has made some experts to believe that the Safaricom share price might not rise as fast as people expect it to. The supply will surpass the demand and the result is the price will stabilize somehow somewhere near Ksh.10 mark.
The only hope is that most institutional investors will not get enough shares during IPO and therefore they will go back to the market to buy more shares since with them they buy for long term investment as opposed to individual or small investors. The rational used by the institutional investors is the cashflow aspect and not capital gain which is popular with small man or woman.
Another issue about Safaricom is the issue of management. On the background is the shadowy figure known as Mobitelea. Well government is not forthcoming about the Mobitelea and it could be that it is the reason the government has been desperate to sell the 25% of Safaricom shares. With the dawn of 21st Century and technological advancement people of Kenya have increasingly demanded transparency in the public offices and there not many corners to hide with people like Githongo having eagle eyes all over. Since it is an open secret that Mobitelea own a substantial stake in Safaricom may be between 5 to 10 %. The Mobitelea could simply hide behind this IPO and sell their shares to the public while everyone believe that it is all about the government
And that bring me to my last point the par value of Safaricom share is 0.05. In essence if you buy the minimum Safaricom shares of 2000 at Ksh.10,000 and there is a meltdown the only amount you would claim from the company is 0.05*2000= Ksh.100. In other words the government or the Mobitelea is selling to the public minimum shares valued at Ksh.100 at Ksh.10000. Well most of you reading this understand the valuation method more than I do, since the recent profitably record of the company is well known, that could possibly justify the Ksh.5 at which each share is valued.
All in all Safaricom shares are great shares to buy and I think it is worth taking the risk based on the future prospect of the company.