Shares in Kenyan mobile service provider Safaricom Ltd. began trading Monday on the Nairobi Stock Exchange in East Africa's biggest-ever IPO, a sign of investor confidence in a country torn apart by deadly postelection violence earlier this year.
The government's sale of a 25 percent stake in Safaricom has energized Kenyans, with some 750,000 applying for an allotment of shares by lining up at banks and brokerages for hours. The sale was oversubscribed by more than 400 percent as domestic and international investors scrambled for shares.
"This IPO is the most attractive in our history," President Mwai Kibaki said Monday before ringing the bell at the stock exchange to begin trading.
Safaricom's share price closed at 6.95 shillings (US$0.116), from the initial price offer of 5 shillings (US$0.08), which represents a 40 percent increase, said Boni Kiundi, an associate director of Standard Investment Bank.
He said a total of 485 million Safaricom shares were traded Monday. The day's average share price for Safaricom was 7.34 cents (US$0.12), said Kiundi. He also said that the total turnover for the day was 3.4 billion shillings (US$566.7 million), another record on the Nairobi Stock Exchange.
"It's never done anything like this," Kiundi told The Associated Press.
The sale has drawn even the poorest Kenyans. Kennedy Agai, 28, who lives in Nairobi's Kibera shantytown, scrimped for a year to buy the stock _ walking instead of spending 50 cents on the bus and skipping meals whenever he could bear it. Now, he's hoping for a payback.
"I know it's a risk to spend my money on stocks, but any entrepreneur has to risk," Agai, 28, told The Associated Press from his tiny shoe shop in Kibera. "But I want to benefit from this, for sure."
In the financial year ending March 31, Safaricom made 13.9 billion shillings (US$231.6 million) in after-tax profits, up from 12 billion (US$200 million) the previous year. During the same period subscribers rose to 10.2 million, from 6 million, Safaricom reported in its March 31, 2008 financial results.
The company says that rise in customers represents 84 percent of the market share. Telecommunications experts estimate that the potential market for mobile phone subscribers is 14 million out of Kenya's population of 34 million.
Thanks in part to high commodity prices, economic growth, debt relief initiatives and recent market-friendly economic policies, so-called "frontier" stock markets throughout Africa, from bigger players like Nigeria to Ghana and tiny Malawi, have been yielding big gains for investors.
The Nigerian Stock Exchange posted some of the highest gains in the world in 2007, its all-share index growing by nearly 75 percent that year, propelled by banking stocks that tripled or quadrupled in just six months _ rare good economic news in a country plagued by graft, poverty and lack of development despite its oil wealth.
The continent's bull market is being driven in part by a growing African middle class seeking new investment opportunities. And with the U.S. economy wobbling, American and European investment funds are taking an increased interest in Africa, buying bargain-priced shares of undiscovered companies.
The Kenyan government is raising US$833 million from the IPO, valuing the firm at about US$3.3 billion.
The sale of 10 billion shares in Safaricom, which the government jointly owns with a consortium led by Britain's Vodafone Group PLC, has dominated headlines in recent weeks. The sale comes as the country struggles to regain its economic footing after December's disputed presidential election.
"Overseas investors have an interest in Kenya despite the problems we had in January," Safaricom's Chief Financial Officer Les Baillie said. "I think going forward it does show there is a lot of money that is looking for very good homes in Africa and particularly in telecoms."
The election laid bare frustrations over poverty, corruption and long-standing ethnic rivalries in Kenya. More than 1,500 people were killed and hundreds of thousands displaced.
A power-sharing deal between Kibaki and Raila Odinga, who was named to the new post of prime minister under the agreement, has ended much of the frenzied bloodshed. But the Kenyan leaders must now try to heal a divided nation and restore one of Africa's most promising economies. One of the most tourist-friendly countries in Africa, Kenya has lost up to US$1 billion because of the turmoil.