More doubts over Safaricom IPO

21 Aug 2007

The public sale of a stake in Kenya’s largest cellular operator – already clouded in controversy – has hit another snag. Business Daily in Nairobi reports that one of the sealed applications from firms hoping to act as legal advisor in Safaricom’s initial public offering (IPO) has been opened prior to the official bid opening date. Treasury officials discovered last week that the application, from a consortium led by Mohammed & Muigai, had been tampered with; the sealed bids are not due to be opened until this Thursday. The Treasury is confident it can avoid having to begin the applications process again, however, having held negotiations with all companies involved. Bids have also been received from Hamilton Harrison & Mathews, Kaplan & Stratton, and Muriu Mungai.

There have already been calls for the Safaricom IPO to be abandoned until the company’s true ownership can be determined. The cellco is 60%-owned by the government, with the other 40% held by Vodafone Kenya. The UK’s Vodafone Group has 87.5% of Vodafone Kenya, with 12.5% in the hands of a mysterious holding company called Mobitelea Ventures. A probe by the Public Investment Committee was unable to discover who is behind Mobitelea and has also raised questions about how Vodafone Kenya came to have a 40% interest in Safaricom when it originally began with a 30% stake. Despite this, the government is determined to plough ahead with the IPO later this year.

Kenya, Safaricom