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Umeme shares IPO in uganda
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charming soul
#1 Posted : Sunday, October 14, 2012 9:40:41 AM
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Joined: 12/2/2006
Posts: 42

Actis will be selling 622.37 million shares of Umeme, Uganda's power distributor, at the Uganda Securities Exchange.

I believe the shares are offered at Kshs 9/=

Is it worth investing???


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guru267
#2 Posted : Sunday, October 14, 2012 11:19:39 AM
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Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
charming soul wrote:

Actis will be selling 622.37 million shares of Umeme, Uganda's power distributor, at the Uganda Securities Exchange.

I believe the shares are offered at Kshs 9/=

Is it worth investing???




I don't think its a good one due to the strained relationship of this company with its only client!

But you can have a look at the prospectus first!
Mark 12:29
Deuteronomy 4:16
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hisah
#3 Posted : Sunday, October 14, 2012 11:40:12 AM
Rank: Chief


Joined: 8/4/2010
Posts: 8,977
IPO to pay shareholders loan. Actis cashes out. Actis wins Wanjikus lose... I'm waiting for the prospectus to see how the slaughter house plans it. At NSE listing will be via introduction. IPOs at NSE after safcom have always nosedived.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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the deal
#4 Posted : Sunday, October 14, 2012 1:49:44 PM
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Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
Its a good investment in the short-medium term but a bad one over the long run (+14yrs). PROS1. Umeme is a monopoly 2. Its a utility 3. Growing demand for electricity-low penetration 4. Oil will boost UG's economy 5. The Company has the potential to be profitable. 6. Bujagali energy means more realiable power for Umeme to sell CONS 1. Only 14 yrs to go before concession expires (could be reason for Actis reducing its exposure)...what happens to Umeme if its not renewed? 2. High Capex-the company needs to invest heavily to improve its network & add more customers to the grid-IPO funds should help 3. Power theft & vandalism=high opex 4. Forex losses...some fixed & variable costs in USD i. Loans 5. High accounts receivables will drag cash flow 6. Politics-populism i.e Umeme can't increase power tariffs.
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xxxxx
#5 Posted : Monday, October 15, 2012 12:53:46 PM
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Joined: 3/20/2008
Posts: 503
guru267 wrote:
charming soul wrote:

Actis will be selling 622.37 million shares of Umeme, Uganda's power distributor, at the Uganda Securities Exchange.

I believe the shares are offered at Kshs 9/=

Is it worth investing???




I don't think its a good one due to the strained relationship of this company with its only client!

But you can have a look at the prospectus first!



There you go: http://www.umeme.co.ug/index.php?page=MjY3
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Murenju
#6 Posted : Monday, October 15, 2012 1:01:23 PM
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Joined: 7/13/2006
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Location: Nairobi
How does Umeme compare to KPLC and Kengen?
Knock hard and it will be opened. Ask and you will be answered. Seek and you shall find.
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mwekez@ji
#7 Posted : Tuesday, October 16, 2012 11:31:55 AM
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Joined: 5/31/2011
Posts: 5,121
Purchase Price; Ushs. 275.00 (Kshs 9 at the current KES/UGX rate of 30.50)
Trailing EPS; Ushs 17.20
Trailing P/E; 15.99X
NBV; Ushs 103.21
P/B; 2.66X
Trailing Dividend yield; 0% (The company has not paid any dividend in the past years and going forward is likely to be affected by capital requirement)

PAT from 2007 to 2010 is a down trend to the extent of dropping to loss zone in year 2010. Then 2011, profit Liar

A total of 622,378,000 shares are on offer of which:
1. Actis is selling 350,000,000 shares (26% of its current holding) – Read ‘cashing out’
2. Umeme is selling new 272,378,000 shares to repay expensive loan granted by Actis to Umeme.

My take:

AVOID

Actis, sole shareholder, is cashing out by selling some of its shares now and having its loans paid now. After the set 1 year lock in period, expect the cashing out game to continue.

This Umeme 20 year concession ending in 2025, just like the RVR one, is not appealing
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JabaBoeku
#8 Posted : Tuesday, October 16, 2012 1:53:09 PM
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Joined: 4/28/2008
Posts: 53
I concur with mwekez@ji.
My take: AVOID.

Prospectus Page 62.

Use of proceeds
Funds raised, net of related expenses, through the issue of the Subscription Shares will accrue to the Company and will be primarily utilised to repay existing shareholder loans.
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hisah
#9 Posted : Tuesday, October 16, 2012 2:57:49 PM
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Joined: 8/4/2010
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JabaBoeku wrote:
I concur with mwekez@ji.
My take: AVOID.

Prospectus Page 62.

Use of proceeds
Funds raised, net of related expenses, through the issue of the Subscription Shares will accrue to the Company and will be primarily utilised to repay existing shareholder loans.

Yep. Avoid this one. I had also mentioned the same to do with that shareholders loan retirement from the IPO proceedings as well as it is obvious Actis is on a cash out here.
$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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mwekez@ji
#10 Posted : Wednesday, October 17, 2012 9:41:00 AM
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Joined: 5/31/2011
Posts: 5,121
Murenju wrote:
How does Umeme compare to KPLC and Kengen?

KPLC and Kengen are far better deal in comparison with Umeme. Umeme has a lower CAGR in earnings, higher P/E, higher P/B and to cap it, Umeme is a concession ending in 2025. Expensive share this Umeme
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mwekez@ji
#11 Posted : Thursday, October 18, 2012 7:49:34 AM
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Joined: 5/31/2011
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Actis barred from offloading Umeme shares for 1 year only. Compared to companies listed on the NSE in the past six years, the anchor shareholders of Umeme were given a relatively short lock-in period. #Red flag

http://www.businessdailyafrica....76/-/e10kfi/-/index.html
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mwekez@ji
#12 Posted : Thursday, October 18, 2012 7:51:50 AM
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Umeme investors warned over Actis conflict of interest

http://www.businessdailyafrica....2/-/6j3ut7z/-/index.html
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the deal
#13 Posted : Thursday, October 18, 2012 9:09:41 AM
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Joined: 9/25/2009
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Location: Windhoek/Nairobbery
Umeme ROE 21% VS Kenya Power's 10.6%.
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mwekez@ji
#14 Posted : Thursday, October 18, 2012 9:21:53 AM
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the deal wrote:
Umeme ROE 21% VS Kenya Power's 10.6%.


2007 to 2010, Umeme ROE is a downtrend to extent of falling into the negative (loss) side in 2010. Then 2011, huge profit. Someone is being fooled
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mwekez@ji
#15 Posted : Thursday, October 18, 2012 9:36:56 AM
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This Actis is clearly not a good person. Actis charges its company Umeme a rate of 12% on USD loans. IFC charges Umeme a rate of 5.63% on USD loans (6 months LIBOR + 5%)(Current 6 months LIBOR is 0.63%). Who does that to their company #sucker
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the deal
#16 Posted : Thursday, October 18, 2012 9:50:03 AM
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Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
mwekez@ji wrote:
This Actis is clearly not a good person. Actis charges its company Umeme a rate of 12% on USD loans. IFC charges Umeme a rate of 5.63% on USD loans (6 months LIBOR + 5%)(Current 6 months LIBOR is 0.63%). Who does that to their company #sucker

The cost of funds determines the lending rates...the IFC & Actis dont have the same source of funds...anyways 12% is cheaper than borrowing from a local Ugandan bank...if you were talking of forex losses then I would understand!
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mwekez@ji
#17 Posted : Thursday, October 18, 2012 9:56:56 AM
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the deal wrote:
mwekez@ji wrote:
This Actis is clearly not a good person. Actis charges its company Umeme a rate of 12% on USD loans. IFC charges Umeme a rate of 5.63% on USD loans (6 months LIBOR + 5%)(Current 6 months LIBOR is 0.63%). Who does that to their company #sucker

The cost of funds determines the lending rates...the IFC & Actis dont have the same source of funds...anyways 12% is cheaper than borrowing from a local Ugandan bank...if you were talking of forex losses then I would understand!


@the deal, what is the interest rate on USD loan in a local Ugandan bank?

Kenyan Banks are lending USD loans to individuals at 9%. Corporates and other lower risk persons are getting lower rates.

Clearly, Actis is a Sucker!
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the deal
#18 Posted : Thursday, October 18, 2012 10:08:19 AM
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Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
mwekez@ji wrote:
the deal wrote:
mwekez@ji wrote:
This Actis is clearly not a good person. Actis charges its company Umeme a rate of 12% on USD loans. IFC charges Umeme a rate of 5.63% on USD loans (6 months LIBOR + 5%)(Current 6 months LIBOR is 0.63%). Who does that to their company #sucker

The cost of funds determines the lending rates...the IFC & Actis dont have the same source of funds...anyways 12% is cheaper than borrowing from a local Ugandan bank...if you were talking of forex losses then I would understand!


@the deal, what is the interest rate on USD loan in a local Ugandan bank?

Kenyan Banks are lending USD loans to individuals at 9%. Corporates and other lower risk persons are getting lower rates.

Clearly, Actis is a Sucker!

I give up! You have alot to learn!
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mwekez@ji
#19 Posted : Thursday, October 18, 2012 10:17:50 AM
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Joined: 5/31/2011
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@the deal, you come preaching to us that Umeme is a good buy and clearly its not. You again come with shenanigan that Umeme ROE is better than that of KPLC yet you havent checked Umeme past performance and its 2010 loss. You again tell us that 12% is a cheap rate on USD loan to a corporate while its not! You have got alot to learn!
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FUNKY
#20 Posted : Thursday, October 18, 2012 11:03:19 AM
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Joined: 4/30/2010
Posts: 1,635
Any idea which kenyan brokers are participating in the Umeme IPO?
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