Safaricom stock seen making strong debut on Monday

By Wangui Kanina

NAIROBI, June 6 (Reuters) - Shares of Kenya's Safaricom [SCOM.NR] may gain around 50 percent at their long-awaited debut on Monday on the Nairobi bourse after east Africa's biggest ever initial public offering (IPO), analysts believe.

Half a dozen analysts consulted by Reuters predicted on average the mobile phone company's stock could rise to around 8 shillings ($0.128) from its sale price of 5.0 for locals and 5.5 for foreigners on what they expect will be a frenetic first day of trading.

After fluctuations from speculation and selling by the many investors seeking a quick profit, the nation's most profitable company should then see its share price reach around 9 or 10 shillings in the coming months, they said.

"I am extremely bullish on a medium-term outlook. I'm looking for an 8-10 shilling range," said local markets' analyst Aly Khan Satchu.

"First day of trading is normally pretty volatile, so I don't think necessarily that the first day is going to be an actual reflection of where it will end up."

The sale of a 25 percent stake in Safaricom was over-subscribed by 532 percent in a show of renewed investor confidence in east Africa's largest economy, despite a violent post-election crisis earlier this year.

The sale of 10 billion shares in Safaricom, which the Kenyan government jointly owns with a consortium led by Britain's Vodafone Group PLC (VOD.L), has dominated the economy in recent weeks, buoying an already strong local currency.

The government is raising 51.75 billion shillings ($833 million) from the IPO, valuing the firm at about $3.3 billion.

"This will be a catalyst for the Kenyan investment market," Satchu added, saying investors scared by the mass killings and economic paralysis of January and February were coming back.

"I have spoken to people who would have closed their eyes and said 'Call me in a year', but now all want to be involved in Safaricom, so I have a very optimistic outlook on it."

"FAMILY SILVER"

After Safaricom's announcement last month of record annual profits of 19.9 billion shillings ($321 million) in the year to March 31, investors will be looking to first-quarter results for the next indication of its prospects.

The firm, with 10.2 million subscribers, commands more than 80 percent of the Kenyan market, and analysts believe its prospects are still good in a growth environment, despite the entry of two new providers later this year.

"In the next few months I think you could see 9 shillings. However, people will be waiting to see results due," said Christopher Hartland-Peel, head of Africa markets for UK-based emerging markets broker Exotix.