The government is targeting a record two million retail investors participating in the Kenya Pipeline Initial Public Offer (IPO), which seeks to raise Sh106.3 billion through floating 11.8 billion shares translating to a 65 percent stake divestiture.
If actualised, the Kenya Pipeline IPO will dwarf the 2008 Safaricom IPO where the retail investors segment registered the largest oversubscription attracting 840,000 individual investors who applied for 23 billion shares.
Retail, institutional and foreign investors have each been allocated the largest quotas in the Kenya Pipeline IPO, with each having 20 percent of the floated 11.8 billion shares ring-fenced for their participation.
This means that retail investors have been allocated a total of 2.4 billion shares in the ongoing IPO.
“The key objective of this transaction is not even to raise Sh106.3 billion for the government. It is to help deepen and democratise our capital markets by widening the reach to more retail investors and bring on board as many Kenyans as possible to own this national asset. We are pursuing oversubscription of this IPO only by one metric and that is the retail investors,” says Belgrad Kenne, the IPO’s Lead Transaction Advisor.
“For us to arrive at Sh9.0 per share, we had to go through a share split in the ratio of 1,000 so that we could make the issuance affordable to retail investors who will now be able to participate with as little as Sh900.
"Both the President and the National Treasury Cabinet Secretary have told us that the most important Performance Indicator for this IPO is to realise not less than 2.0 million ordinary Kenyans participating,” Dr Kenne says.
The Lead Transaction Advisor has revealed that Kenya Pipeline undertook a 1,000 for one share split, ahead of the ongoing IPO with a view to bring down the price to single digits.
The share split translated to an increase in the company’s shares from 18.2 million to 18.2 billion.
The team steering the Kenya Pipeline IPO has now changed focus and backpedaled on roadshows targeted at the institutional and foreign investors and diverted the focus to retail investors in a bid to ramp up the numbers.
The Lead Transaction Advisor says that the month-long offer period running from January 19 through February 19 is designed to allow retail investors ample time to consider and take necessary measures to participate in the IPO.
“Given our focus on the retail investor, it was important for us to lengthen the offer period so as to allow ordinary Kenyans to make all the arrangements that they need to participate in the IPO.
"Early days indicate to us that currently, every other segment except retail is fully subscribed, they are simply going through the subscription processes. We have now taken a strategic decision to go slow on roadshows and focus on the retail investors,” Dr Kenne says.
Once the offer is closed on February 19th, Kenyans should expect to see the IPO’s subscription results on March 4th with the bell ringing earmarked for March 9.
