The Real Reasons Why British American is Listing At The Nairobi Stock Exchange


I get a lot of mail on this blog. Some are from politicos wondering why their favourite politician is not mentioned regularly (yes, that still happens in the year 2011), feedback on articles or just haters with a keyboard and fingers that can type faster than their mind can process. They are all welcome. As my favourite musician says, you make me what I am.  And last week, Renson asked this question;

Since it looks like British American is a profitable company, why have the shareholders chosen to list? What is their real motive?

There have been many theories why the company is listing. The most popular, and wrong, is that shareholders will walk away with stashes of cash and become instant billionaires when British American Investments lists. Truth is, none of the KSh5.85 billion to be raised is going to any of the shareholders. Even after the company lists, the current shareholders cannot sell their shares for two years.

So, why are they listing? The main aim of the IPO is to raise capital for financing the company’s strategies.  They include:

Regional expansion: KSh1 billion will be used to expand the company in new markets like Tanzania, Rwanda and South Sudan. Already, it has a subsidiary in Uganda. BTW, congrats to South Sudan for becoming the new African state. I wish you God’s blessing, guidance and prosperity. Just make sure you regulate your matatus from the onset, otherwise you will be like us(visit our roads in the morning for a live demo)

Development of core Kenyan Market: We have a new constitution which provides for counties. To reach this core and expand services to other parts, KSh1.28 billion will be needed. Also, the money will be used to invest in ICT and expand distribution services.  Look out for our office in your county.

Property development: Do you know Kenya needs 150,000 housing units but only 30,000 are provided yearly? We will be investing in this sector and Ksh2.5billion of the monies raised will go to property development including homes, office space and other unique developments. You never know, you can buy the IPO and kiss (or smack) your landlord goodbye at the same time, all courtesy of British American.

Debt redemption: You think you are the only one who owes your mechanic some cash? We have debts to pay debts too bwana. KSh750 million will be used to clear an outstanding facility from Commercial Bank of Africa.

IPO expenses:  Ksh320 million will be used for IPO expenses including paying CMA and NSE fees, advertising costs, PR etc. And a trickle to this brother for what he is doing here. A brother has to eat and pay rent.

You and me: More importantly it is giving me and you the chance to own this company. Seriously, what are the chances of starting another British American now and growing the company to where it is? So, why not buy a stake in it and watch your money grow?

Over to you Renson.

NB// Fuel price went up by 46 cents yesterday. So much for falling fuel prices!


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s