Whereas most pundits were expecting a lukewarm subscription rate for Eveready Batteries (EA) since the manufacturer is not seen as a growth story in a market faced with counterfeits & imports, the attractive price (not value) of KES 9.50 spurred a massive oversubscription (+800%) primarily driven by retail investors.
The first day of trading (Dec 18 2006) showed a modest gain to KES 11/- due to a goof by the error-prone Nairobi Stock Exchange (NSE). We hope that the error is not repeated. The ATS system allowed for a mere 10% movement in price thus limiting the first day price gains to 10%. Sensing the goof-up, brokers only transacted 13,100 shares.
The 2nd day (Dec 19 2006) saw a huge increase in price to range between 18/- to 28/- but with a weighted average price of KES 19.15 with almost 630,000 shares trading.
The meager share allocations across thousands of shareholders mean that there will be lots of shares available in the near future as speculators cash in. The long-term price trend will depend on future profitability.
The performance of Kenyan IPOs and Offers for Sale (OFS) is encouraging private firms to look to the NSE as either a potential source of equity or partial divestiture.
Tuesday, December 19, 2006