Last call for Britak IPO

August 5, 2011
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, Benson Wairegi, Group MD British AmericanNAIROBI, Kenya, Aug 5- The British American Investment Company Initial Public Offer (IPO) closes on Friday but there has been little last minute rush that characterises such transactions.

A spot check by Capital Business revealed that most brokerage firms were not unusually busy as has been the case in previous offers, a scenario that has been attributed to the hard economic times.

Investment analysts say the disposable incomes for many retail investors have been eroded by the current inflationary pressures which have been surging for the seventh straight month to stand at15.53 percent in July.

“The participation from retail investors has not been strong and this can partly attributed to the fact that many of them do not have enough savings to spare,” explained Suntra Investment Head of Research Johnson Nderi.

Further he added the existence of alternative investment channels such as through banks could also be the reason why long queues have not been witnessed in the run-up to the offer’s closure.

Although he felt confident that Britak will achieve the minimum threshold of Sh2.5 billion, Mr Nderi was uncertain about whether the firm would be able to rake its Sh5.85 billion target.

Despite these dynamics however, Britak is optimistic that all the 650 million new ordinary shares on offer will be taken up.

The offer has been set at Sh9 per share; a price that the investment firm believes is affordable and will appeal to many investors.

“We have so far received strong retail participation with most of the numbers coming in the last week. We have stronger participation from the rural areas and the numbers from Nairobi and other urban areas are also very good. We are also receiving significant participation from the regional market, especially Uganda, where as you know we recently opened a new office,” Group Managing Director Benson Wairegi said.

Foreign investors and East African retail investors have been allocated 30 percent of the shares each while a further 37 percent has been reserved for institutional investors.

Employee, Agents and Individual Life Policy Holders will have the opportunity to purchase the remaining three percent.

A week after the launch of the IPO on July 12, the top management embarked on a road show which Mr Wairegi said was received very well.

“During our road shows, we met over 30 institutional investors both in Kenya and Uganda and we are getting good feedback that these investors will be coming in to take a portion in British- American. Fund managers and other institutional investors have also been very supportive and we expect more applications to be launched before closure,” he added.

Fund managers and brokers are expected to start computing the figures after the closure of the offer at 3 pm on Friday after which they will be presented to the Capital Markets Authority for approval.

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