Someone should have advised President William Ruto that targeting ten IPOs in 12 months was not only a bad idea, but also gave the wrong signal.
Was it a political ploy? Another misleading marketing attempt at privatization? Part of broader political marketing? Choose what you believe but it's been 18 months and counting since the big announcement. No one is excited anymore.
Closely linked to this ambition is another ambition of the “Shareholder Nation.” On the surface, it makes sense; Look at how much of a hit we've taken since foreigners chose to play on the sell side.
All we need is another popular list. But is our enthusiasm to have Anyango, just like Wanjiku, own too much stock?
I have referred (several times) here to the “Let's Get Sid Investing Again” campaign led by former UK Prime Minister, Margaret Thatcher. Although the campaign showed great success in the first ten years, it faded years after she left the premiership.
A report by ResPublica/Co-operatives UK now shows that individual share ownership has almost halved to just 11% of the total value of shares traded in the UK compared to 20% in the mid-1980s.
Most people choose to own shares through their pensions and mutual funds, and this represents around 46 percent of the total value of shares traded in the UK today. Is Shareholder Nation still an important campaign?
I say yes for three reasons: liquidity, liquidity, and more liquidity. How do we get there? I'm happy to say let's revisit something that worked before.
Quick profit
Everyone is well aware that for political reasons, the government priced Safaricom shares cheaply in an attempt to ensure huge demand from investors and a first-day premium to claim a successful sale.
These sales tend to be popular because people know that it is a giveaway that allows them to take advantage of a quick profit. Such a strategy has a high probability of “bringing Anyango back to the market.” Of course, there is no guarantee that what happened in 2008 will not happen again, and any upside may be limited by recent volatility.
It's a tall order. In fact, the above approach has been blamed for attracting the wrong kind of investors who leave immediately after the IPO process cools down.
Moreover, what are these hot state-owned companies that the investing public is drooling over? Sentiment surrounding stock market investments is also very low and I believe that “retail bids” represent a high-risk option for improving stock ownership.
Stocks have proven to be difficult investments since 2019 with prices affected by Covid-19, rising interest rates and erratic profitability. In addition, financial literacy in the country is alarmingly low. Only 38% of Kenyans are financially literate, according to the 2021 Global Financial Literacy Survey.
Competition with high-yield Treasuries and poor investor education have also created additional challenges.
But I'm still optimistic. I think the planned sale of these state-owned companies is something that “Anyango” should be told about.
Mwanyasi MD, Canaan Capital.