Even as Safaricom notched a stellar 50 per cent increase in its share price on the first day of trading, for some investors, it was not a good debut for the telecoms giant.
For thousands of investors, many of who had borrowed expensively for interest rates of up to 20 per cent, Safaricom represented a major gold digging opportunity that they were willing to exploit for all its worth.
“The actual direction will be discernible after refunds have been en-cashed, which is from today for those on EFT and earliest 4 days time for those with cheque refunds. For now it is rangebound at 7.30 to 7.60 and the transaction volumes are just too high,” said David Mataen, the finance director at Faida Investment Bank.
Hassan Mohamed, joint managing director of Dyer and Blair Investment Bank which partnered with Morgan Stanley International for the IPO’s lead transaction advisory services said that the share is going to be the most liquid at the NSE noting that it was already doing more than 90 per cent of total turnover during the first hour of trading. Within the first hour of trading, over six million shares had been transacted.
“Some people had asked that we go for Sh50 per share, but we told them it was impossible. At Sh8, that seems a reasonable place,” said Peterson Mwangi, managing director of Afrika Investment Bank.
Besides the huge volume of shares, the other reasons that investment analysts cited as likely to affect Safaricom share include low earnings per share (30 cents for 2006/7 and 35 cents for 2007/8 financial years) compared to most other listed stocks and a low dividend in two to three years due to the need for re-investment by the company to fend off rivals.
James Murigu, CEO of Suntra Investment Bank saw long queues of refund-seeking investors stream in, was upbeat that the share would stabilise as soon as the refunds begin to flow in.
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