Kenya not ready for EFT in IPO refunds

June 25, 2008
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, NAIROBI, June 25 – A leading investments banker says the country is not yet ready for Electronic Fund Transfers in transactions relating to Capital Markets.

Faida Investment Bank Managing Director Bob Karina said Wednesday that though EFTs could provide a solution to the slow IPO refund processes they would not be an immediate solution, noting that there are a number of impediments including a huge un-banked population, lack of trust, issues of literacy and a highly un-computerized society.

"Even for those who have bank accounts not many would like to disclose their bank details because they feel if they disclose someone might get into their account," said Karina.

He proposed that investors be given a choice in application documents to indicate how they would prefer to have their IPO refunds made to them.

Karina points out that depositors may want to re-invest their refunds without having to first cash their cheques, which makes the current system cumbersome.

Meanwhile, Karina who is a Lead Investment broker for the Kenya Commercial bank rights issue is optimistic of the full uptake of the 221.7 million new shares on offer.

Karina said there has been a huge demand for the rights since they begun trading at the stock market on Monday.

He is calling on shareholders who may not be able to participate in the rights issue to sell their rights in the market at the current going price of between sh5 and 7.

Karina assured shareholders that Provisional allotment papers required for application of the rights, have been dispatched to respective postal addresses.

The document will also be used for the application of irrevocable bank guarantees for investors interested in the extra acquisition.

"All you need is for the bank to confirm that you have sufficient funds in your account to pay for any extra shares you may require," Karina explained, emphasising that these shares will not have to be paid for immediately but until allocated.

Previously only Qualified Institutional Investors (QII) were allowed the option but in this particular rights issue its open to all kinds of investors.

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