Efects Of Initial Public Offer On Peerfrmance Of The Stock Market In Kenya

ABSTRACT The objective of this study was to establish the effect of initial Public Offer (IPO) on performance of the stock margent in Kenya. This study will specifically look at a case study of safaricom Ltd. The management of public offers is significant to investors, issues and the government, which in this case represents the interest of the masses and welfare improvement, in the process of analyzing the price patterns, to proactively manage their pmifolio and develop strategies that lead to superior gains on the market and improved welfare. A public offer if properly executed has potential of raising large sums of money that would otherwise not be possible through borrowing, and also improving incomes of the citizens through such kind of investments when the masses gets involved in planned or unplanned investment, it that they do not have large sums of their incomes lying in the banks, but puts it in productive thereby improving their income distribution. An initial public offer however is not always smooth. There are vanous risks and costs associated with floating shares; both to the issuers and investors As more and more IPO's flooded the markets I the last quarier of2010 and early the following year. there was need to be wary of the imminent risks associated with IPO's and not necessarily stocks trading in the secondary market. There are various opportunity to accelerate growth and take a big step for the companies towar·ds achieving their usual vision of markets, the impact such a process has on the investors as well as the government As a newly listed business, it's impmiant for them to be aware of the risks, ar1d prospects that they now deface. These can range from: • Presenting unexpected result to the market • Uncertainties associated with new initiatives, such as global expansion To achieve full potential and deliver on pre -IPO promises compar1ies must have a clear picture of the new environment - both the oppmiunities and the risks. It also paramount's that they commnnicate this to the investors, i.e. the risks and prospects that they put themselves in the line to face.

TABLE OF CONTENTS

DECLARATION .......................................................................................... i APPROVAL .............................................................. ............................... ii DEDICATION .......................................................................................... iii ACKNOWLEDGEMENT········································································· IV TABLE OF CONTENTS......................................................................... . v LIST OF TABLES ................................................................................ viii LIST OF FIGURES ················································································· IX ABSTRACT............................................................................................... X CHAPTER ONE ......................................................................................... I 1.0 Introduction ................................................................................... 1 1.1 Background of the Case Study ............................................. I 1.2 Background of the study ............................................................ 3 1.3 Statement of the problem ......................................................... 4 1.4 Scope of the study ....................................................................... 5 1.5 General Objective of the study ................................................ 5 1.5.1 Specific objectives .................................................................... 5 1.6 Research Questions ................................................................... 5 1.7 Significance of the study .......................................................... 5 1.8 Conceptual Framework .............................................................. 6 1.8.1 Conceptual Model ................................................................... 7 CHAPTER TWO ................................................................................. 8 2.0 LITERARURE REVIEW ................................................................... 8 2.1 Introduction ..................................................................................... 8 2.2 Definition oflnitial Public Offer ................................................ 8 2.3 History of Nairobi Stock Exchange (NSE).............................. 8 2.4 Requirements for listing on stock market. ........................ I 0 2.5 Effect of Safari com Share on the Kenyan Market............ I 0 2.6 Kenya Unit Little Changed Vs Dollar, Awaits IPO Impact ................................................... 12