Kenyan government values Safaricom at $3.1 billion

Kenyan government to sell quarter stake in Safaricom through largest ever East African IPO

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By  Derek Francis Published  March 19, 2008

The Kenyan government said on Friday that it would sell a 25% stake in mobile operator Safaricom, in what is touted as the largest IPO in East Africa.

The sale of 10 billion shares will raise about Ks50 billion ($777 million) for the Kenyan government. The government owns 60% of the operator, while Vodafone Kenya and Mobitelea Ventures own a 35% and 5% stake respectively.

The shares are being offered to Kenyan investors for a fixed price of Ks5 ($0.08) per share, valuing the company at $3.1 billion. Up to 35% of shares will be offered to international investors for a higher price, via an overseas tranche with a lower limit of Ks5. However, this proportion could be reduced if the local tranche sees subscription rates top 200%.

The offering is set to open on 28th March and continue through to 23rd April. Trading in shares on the Nairobi Stock Exchange will begin in June.

Investors have already begun selling off stocks in preparation of the IPO; the NSE20 index has dipped as retail companies and other blue-chips are expected to suffer as excitement for the listing builds.

The move serves as a bellwether for overseas sentiment towards investment in Africa, and how the continent may be exempt from the global sub-prime crisis affecting bourses worldwide. It comes as the country attempts to recover from post-election turmoil, in which civil war threatened.

Safaricom boasts about 9.5 million subscribers, and claims a market share of about 70%. It enjoyed a massive increase in its user base since the launch of its mobile banking service almost a year ago. In a country with widespread rural areas, M-Pesa has given many Kenyans without conventional access to banking the means to make money transfers, which have totaled over Ks9.3 billion ($144.5 million) since its launch 11 months ago.

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