Scangroup to Refund Investors Sh3.8bn

By Godfrey Tung'wet Posted 24 August 2006 @ 01:49 pm EET     Print     Reprint     E-Mail     Comments

NAIROBI (IBTimes.com) - The Scangroup public offer shares were oversubscribed by 500 per cent, the firm announced on Wednesday.

The advertising and public relations company is selling 43.3 per cent of its stock in an initial public offering (IPO) in which investors applied for 428 million shares, although only 69 million were available.

According to the allocation results announced on Wednesday, the IPO attracted 96,459 applications for 428,386,000 shares, against the 69,000,000 offered, reflecting an oversubscription of over 500 per cent.

"It has been impracticable to implement allocation policy for category ‘C’ applicants, as there are insufficient number of reserved shares to ensure that all valid applications get a minimum of 500 shares," the firm said.

The company's chief Mr Barat Thakrar indicated, that this had necessitated an amendment of policy for the share allocation to the category ‘C’ applicants, with approval of Capital Markets Authority. The firm received 283,416,600 applications for the 34,500,000 shares reserved for individuals, with 93,466 of the applications declared valid.

Scangroup had divided its investors into three categories, with category A reserved for employees who were allotted five per cent of the shares that were on offer. Category B consisted of institutional investors who will receive 45 per cent and category C involved individual investors who were expected to take up the remaining 50 per cent.

However, following revision of the share allocation criteria, individuals who applied for between 500 and 1,000 shares have received 300 shares, while those who applied for between 1,100 and 5,000 have been granted 400 shares.

Applications for between 25,100 and 50,000 shares would get 800 shares, and between 100,100 to 500,000 will get 1,500. Applicants for between 500,100 and two million stand t o get 3,000, while over two million share applicants would be allotted the maximum 6,100 shares.

Scangroup says successful applicants would receive their allotted shares and cheque refunds in accordance with the instructions contained in the application forms.

The firm also stated that though employees and corporate investors who applied for 500 to 15,000 and 500 to 10,000, have been given full allocation, any additional share applied for would be allocated on a pro rata basis.

About 12,881 applications were rejected as a result of failure by the applicants to comply with the terms and conditions of the offer. The Scangroup offer kicked of on July 17 and trading on the Nairobi Stock Exchange is expected to commence on August 29.

Analysts contend that like the KenGen’s IPO which was oversubscribed by more than Sh16 billion, Scangroup’s issue underlines the excess liquidity in the market.

The offer price was set at Sh10.45 per share, with allotment of these shares initially intended to be carried out on a progressive basis starting from 500 shares.