There is a difference between actual shopping and window shopping.............

why are these guys fixing the number of shareholders they need to 1500? this does not make much business sense to me.

SIB or KESTREL

Sorry, I was derailed by Obiero...My thoughts were on whether this company is worth investing in. To me it looks like a Cat , but with 1 life ! I fear it may do a 'paka' on share holders within 6 months

@Deacons interested wazuans

Got the DEACONS KENYA LTD PUBLIC OFFER FOR SHARES |FACT SHEET 17 NOV – 2010. But the graphics will not appear here.

If you need the original, put your E-mail here.

Offer price : KES 62.50
Offer opens : 17th November 2010
Offer closes : 30th November 2010
Shares on offer : 12,800,000 shares
Offer size : KES 800 Million
Forecast Net Earnings FY10 : KES 149 Million
Prospective Offer P/E : 8.23x
Minimum Subscriptions
Qualifying Institutional Investors : 16,000 Shares [KES 1Million]
Individual/Corporate Investors : 2,400 Shares [KES 150,000]
Existing Shareholders : 10,000 Shares [KES 625,000]
Employees (share save scheme) : 80 Shares [KES 5,000]
Details of the Offer
The company and its businesses have been expanding and diversifying
into new products and franchises in the last five years
across the region. Deacons currently holds franchise for well
known brands such as;
• Woolworths in Kenya
• Truworths in Kenya and Tanzania
• Identity in Kenya and Tanzania
• Mr. Price in Kenya, Uganda and Rwanda
• Adidas in Kenya
• Life Fitness in East Africa (acquired in 2010) and
• Own brands namely; 4U2 and Angelo.
DEACONS KENYA LTD PUBLIC OFFER FOR SHARES |FACT SHEET 17 NOV – 2010
Company Background & Principle Business
Deacons Kenya Limited (Deacons) was incorporated in Kenya as
a private limited liability company in 1973 and has recently converted
to a public company on 26 October 2010. Deacon’s principle
business is to operate retail establishments including franchise
and department stores selling ladies', men's and children’s clothing,
footwear, accessories, gift items, home furnishing, toiletries,
cosmetics and sporting goods amongst other items.
Business Network
Objectives of the Offer
The medium term strategy of the Company is to increase its
store footprint from current 23 stores to over 50 stores in next
five years within Kenya and the region. The Company requires
additional funding for its expansion plans and the issue of
shares will strengthen its balance sheet, which will provide opportunity
for further leveraging. The net proceeds from the offer
will enable the company to;
• Expand the store footprint for its existing brands within
Kenya.
• Facilitate the expansion in East African Market (particularly
Uganda and Rwanda).
• Pursue new opportunities and grow the group portfolio of
international brands.
• Develop/acquire central warehousing and head office facilities.
Historical and FY10 Financial Performance
Transaction Advisors and Authorised Selling Agents to the Offer
Profits in the FY09 were boosted by a 30% increase in turnover
following an introduction of four new stores that commenced
trading in the last quarter of 2009.
During the current financial year 2010,the company forecasts
sales to touch approximately KES 2 billion compared to KES
1.5 billion in FY09 on the back of continued diversification and
expansion programs through restructuring and addition of new
stores.
Investors wishing to participate in the offer are advised to carefully read the Information Memorandum dated 12th November 2010
available at the offices of the below advisors to the offer and authorised selling agents.
STANDARD INVESTMENT BANK
16th Floor, ICEA Building, Kenyatta Avenue
Nairobi, Kenya
Tel: +254 (20) 2220225
KESTREL CAPITAL (E.A) LIMITED
5th Floor, ICEA Building, Kenyatta Avenue
Nairobi, Kenya
Tel: +254 (20) 2251758

Financial Information
Deacons’ sales trend peaks in second half of each financial year as illustrated below. The month of December has always reported the
highest sales due to festive season. The sales in second half of the year in the period 2005-2009 averaged 61% compared to 39% in the
first half of the year.
Seasonality of Sales
Existing Shareholders Trading of shares
The company will not engage in any unregulated
trading, except that, willing sellers can sell their Shares
to willing buyers at such price as may be agreed
between them, and shares can be transferred using a
duly executed share transfer form which should be
deposited with the Registrar together with the relevant
share certificate in relation to such Shares (if
applicable). Share transfer forms can be obtained from
the Company or the Registrar. Buyers of shares will
have to pay the applicable stamp duty on such
transfers to the Collector of Stamp Duty, and any
direct or other costs.
The authorised selling agents will facilitate Over
The Counter (OTC) trading in the shares of the
company.
Investment Merits
A pre-NSE Listing opportunity to invest in a
company with;
• The leading Fashion retail stores in E.A
• Franchise Agreements with International store
brands
• Premier shopping malls located across E.A
• Planned growth of upto 50 shopping malls
across East Africa by 2014
• Growing loyal customer base
• State of the art IT system and inventory control
• Proven and experienced management
• Within a business environment of growing disposal
income from East Africa’s growing middle
and upper income classes.
Current shareholding No. Of Shares %age Shareholding
Swedefund International Aktiebolag 3,816,225 19.45%
Pinpoint Investment Limited 2,365,940 12.06%
Charles Mwangi Gathuri 2,165,940 11.04%
Diana Bird 2,165,642 11.04%
Kirimara Limited 1,999,273 10.19%
Trikay Development 1,717,273 8.75%
Aureos East Africa Fund LLC 1,382,667 7.05%
Muchiri Wahome 778,672 3.97%
Subtotal 16,391,632 83.54%
Others 3,229,965 16.46%
19,621,597 100.00%
Subject to the Company meeting the necessary eligibility criteria and obtaining the requisite approvals, it is the intention to list the
Company’s shares on the Official List of the Nairobi Stock Exchange (“Listing”) by Introduction at a later date. Under the Capital
Markets (Securities) (Public Offers, Listing and Disclosures Regulations 2002), the Listing can only happen after the expiry of 12 months
from the date the Offer Shares are allotted in accordance with the provisions of this Information Memorandum. The Shares will not be
traded on the Nairobi Stock Exchange until such time as the Listing occurs. In this respect, this Offer is a step towards achieving this
objective.
Stock Exchange Listing
Important Notice
Investors are encouraged to open new special CDS account into which the shares will be deposited for ease of trading under the OTC
platform to be facilitated by the Authorised Selling Agents and the Share Registrar, CDSC Registrars Limited. The Offer may close early
at the discretion of the issue subject to the necessary CMA approval. Investors are therefore requested to apply for the shares early.
Deacons Kenya Limited Public Offer -Fact Sheet-17 Nov 2010

Exactly who will they sell 2B worth of goods to?

This one is an insult to the NSE.

Did I see Kirimara Limited 1,999,273 10.19%

@mainat long time; @surealligator sure stuff!
Forgive ignorance in my thoughts...

So it seems the IPO is to finance more growth, perhaps also reduce 86m in short term borrowings + 195m in trade payables.

I see Kibaki having 12% through Pinpoint Investment. Happy to see Diana Bird former MD having 11% and Muchiri Wahome 4%.

The full offer represents 39.5% of Deacons. Old share holders are left with 60%.



Business shows gross profit margin of 45% in a bid to recurit more middle class (LSM 8) customers. Net profit margin of ~6%.

Past EPS: 4.06 and Forecast EPS: 7.59
Implied PE: 15.41x and Forecast: 8.23x
Past DPS: 1.79

Tanzania is tough market - losses. In Business Daily graphic, I see Truworths+Woolworths with about 60% major contributor. Reality seems Deacons presently earns most from 6% Kenya - Women in upper class. New entrants Adidas and Life Fitness are the only ones perhaps touching men more...


Ebb and Flow
I must confess I've had personal turmoil when it comes to investing. At the time of KCB Rights Issue, a mass market financial company with regional presence at a P/E of 9.2, I thought myself smart to say NO. Lately I think my decision was right but timing wrong.

Here we have a commercial brand/retail company, targeted at premium customers, forecasting to grow sales at 40% and EPS by 80% (through operating leverage). To trade OTC so I need to wait until NSE blast!

I wonder, what's Jubilee's forecasted growth rate and should I buy more of that instead? If I looked at Diamond Trust Bank, I wouldn't budge.
Decisions, decisions...I've always had a thing for fashion!

As per Surealligator's post:

Current shareholding No. Of Shares %age Shareholding
Swedefund International Aktiebolag 3,816,225 19.45%
Pinpoint Investment Limited 2,365,940 12.06%
Charles Mwangi Gathuri 2,165,940 11.04%
Diana Bird 2,165,642 11.04%
Kirimara Limited 1,999,273 10.19%
Trikay Development 1,717,273 8.75%
Aureos East Africa Fund LLC 1,382,667 7.05%
Muchiri Wahome 778,672 3.97%
Subtotal 16,391,632 83.54%
Others 3,229,965 16.46%
19,621,597 100.00%

I've realised a commonality on most IPO's, they all put an emphasis on their profitability and their prospects of growth in terms of sales. They give rosy pictures through profitability & sales ratios but what investors tend to forget while reading these prospectus during this era of increasing shareholders wealth is that the strength of the balance sheet is what helps in profitability and reservation of shareholders wealth. Check on their debts & asset base carefully & perform some ratio analysis too