Swapping Sukuma for IPO Stock in Kenya

The current ardor for a new Kenyan IPO lends some support to fans of so-called frontier markets:

Taxi drivers, kiosk owners and street vendors have been queuing up at banks in downtown Nairobi to subscribe to shares of mobile-phone company Safaricom Ltd. in East Africa’s largest IPO. The government is selling 25% of the company, a stake valued at about $800 million. The new shares will be listed on the Nairobi Exchange in early June. There is no underwriter on the deal, though Morgan Stanley & Co. International PLC is serving as the coordinator and sole bookrunner.

The Safaricom offering, which had been delayed from December amid election-related violence that month, could be an early indicator that Kenya’s economy — badly bruised by the violence — is moving on.

"After the IPO, I’m going to make a bit of money," said Mwatha Karuita, a 50-year-old lab technician, as he prepared to buy shares one recent day.

… Jane Kerobu, 35 years old and with her three-year-old tied to her back with a red scarf, came into a Diamond Trust Bank branch in downtown Nairobi one recent morning. She supports her five children by selling cabbage, potatoes and sukuma, a vegetable used in traditional meals, in a small town outside Nairobi. With no bank or brokerage account, the single mother saved the $160 needed to buy a minimum stake, having decided to buy when the offering was announced last year. Bank representatives set up special tables to help first-time buyers open an account.

I love that markets are becoming more open and active in Kenya (and elsewhere in Central Africa), but people swapping sukuma for stock is unlikely to end well.

[via WSJ]

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