The Somen Brothers and the Looting of AccessKenya after the IPO

Posted In Business - By robertalai On Friday, April 29th, 2011 With 25 Comments

So AccessKenya has been touted as this great company which was built by David and Jonathan Somen who happened to be such great minds. They managed to pull the move and together with strong connections in the CMA and the Kibaki’s government, had this great IPO which resulted in the more than 300% over-subscription of the shares.

The share details were as follows;

Offer Dates: April 19th – April 30th 2007

IPO price: Ksh. 10.00

30% of the Company or 80 Million shares on offer.
28 Million to Retail Investors
4 Million to Employees

48 Million to Institutions

Minimum individual application:
5,000 shares or Ksh.50,000.00

Minimum Institutional application:
50,000 shares or Ksh.500,0000.00

 

Even after this IPO, AccessKenya’s situation didn’t change much and a strong manouver and secret movement of cash was hatched by David Somen who happens to be the crooked of the two Somen brothers. Jonathan is praised as a shrewed businesssman whose interest was to build a great company and improve the company. But after tasting the money from the IPO and getting to hobnob with the powers that be, he changed from that great businessman and managed to fall for the cajoling of his brother, David, and the siphoning of money from AccessKenya started.

By the end of 2009, AccessKenya didn’t have much in liquid cash out of the more than 800 Million shillings raised from the IPO. All the money were secretly wired to offshore locations with David and Jonathan playing a big part in that. AccessKenya as it remains now is a shell of a company cannot boast of any strength to entice a prospective investor. When all the wiring of the money was complete, Jonathan and David were on a shopping spree for interested parties to buy the company. I am not sure if they go any offers but some sources tell me that there were not much offers. After the IPO, the share price shot to all time high and was Ksh 36. Now the share price flactuates between Ksh 9.10 – Ksh 9.35 which is below the IPO price of Ksh 10.
AccessKenya’s Share Pricing Graph for the last 3 years;
The Somen brothers have continued to blame the acquisition of 70% of OpenView Business System in 2007 at Ksh 150 Million as the main cause for AcceessKenya woes. The remaining 30% of OpenView were acquired by AccessKenya at Ksh 18 Million in 2010. The problem is that David Somen was running and is still running some business called Virtual IT Limited in UK. Virtual IT Limited was at one time voted even among the fastest rising small IT companies in UK. The AccessKenya money which were repatriated to accounts in Ireland, were used to better the Virtual IT business. Virtual IT was ranked number one in London and number 3 in Uk in the Deloitte Fast 50 Tech Awards.
OpenView was bought and immediately David embarked on changing the business from providing outsourced services to corporates to actually trying to offer the small services to SMEs. The problem is that SMEs are not a great venture in Africa and relying on them for business was not that wise. OpenView started on a downward spiral and the Somen brothers went out full blast blaming the previous owners for selling to AccessKenya a shell of a company.
We are told that the Somen brothers saw red in AccessKenya the moment Safaricom acquired One Communications. Safaricom’s foray into what had been AccessKenya’s forte was such a strong red flag that the repatriation of profits and capital from AccessKenya books was hurried through. This ignited a boardroom war which saw the quit but angry exit of 3 key directors of the company. Though the boardroom war was blamed on the inflated cost of building the metro cable to serve the over 3,500 residential clients, that was just part of it. The other reason was that. While bidding time and looking for suitors, the Somen family reduced their stake in the company from 45% to 25.4% quietly. The Somen family have previously blamed heavy investment on the fiber optic as the main cause and though they have bragged in many instances how the company has the most stable cable, the quality of connection offered by the company pales in the shadow of even such companies as Zuku and some small broadband home providers.
The company later ventured into content provision which saw them start the home portal. The www.home.co.ke was one time only second to Daily Nation website in local internet traffic. The portal is now a pale shadow of its former self with strong indication coming that AccessKenya expects to shut down the portal sooner rather than later. The portal has never broken even considering the investment put into building it. AccessKenya was used to providing cooked up statistics with the hope that users would be enticed with great raves and reviews without content, WRONG. Users flocked Home Portal because of the great content which was previously being well delivered. We questioned the display of cooked up stats while the independent web crawling services were giving a different picture.
In fact, AccessKenya is still in the league of companies which will offer you a 256/512Kbps connection at a rate of almost 9,000 for corporate connection. This kind of connection cannot be expected from a company with high investment in the cable. If you want higher speeds from AccessKenya, you will be forced to fork an extra Ksh 25,000 per extra Mbps of link according to Safaricom staff based at Westgate Shopping Mall’s experience centre.
AccessKenya is on a downward spiral and the fact that the people who bought onto the company’s IPO are ordinary Kenyans makes this a case of one of the biggest financial fraud under the watch of CMA. The capital movement at AccessKenya have never made CMA intervene and ask questions. Since the last year was the first in AK’s loss making, the margin of loss is set to increase and nobody will be held to account as we hear that key personnel at CMA were aware of what has been happening at AccessKenya and nobody has cared to intervene.

About - Robert is an African Tech Blogger, Critic, Net Evangelist, Speaker, Mentor for Young Boys and Girls, Editor @TechMtaa and likes to Provide Sanitary Towels To Poor Women through the DishAPad Initiative

  • Watching this stock closely! Maybe a hostile takeover may be their saviour, especially by a company that will need their fibre network.

  • Amkakenya

    woah scathing article!

  • Thanks for shedding the light on the invidious AK scam. I also thought something was very wrong when they started posting losses.

  • Probably true, but the writing style (full of grammatical errors unlike the usual articles) indicates it was written with furious bile

    • Owicho

      Harry, everybody knows what is happening here and you look like you have a grudge with the writer. How many English language books have you published or how many successful blogs have you run?

      This article is on point

      • Owicho, I’m just stating things as they are. If you google my tweets,
        you will see that I have similar misgivings about AccessKenya. However
        that doesn’t take away the sub-standard writing of this article, it
        would have packed more punch if it didn’t sound so angry. Secondly I have nothing against Robert Alai and quite enjoy his net journalism.

        • Owicho

          Harry, what evidence of “anger” are you talking about? I think you are settling some personal issues here or you are just stupidly jealous of someone. Did you want Robert to clap for the Somen Brothers for “looting the company”? Boss, you don’t look sensible in your argument

          • Owicho. There doesn’t need to be any evidence of anger, that is my subjective view i.e. my opinion. You need to chill out.

      • Owicho, I’m just stating things as they are. If you google my tweets,
        you will see that I have similar misgivings about AccessKenya. However
        that doesn’t take away the sub-standard writing of this article, it
        would have packed more punch if it didn’t sound so angry. Secondly I have nothing against Robert Alai and quite enjoy his net journalism.

  • kaz

    I had been a happy home user of their [email protected] Wimax service for 2 years. Things deteriorated in November last year where speeds dropped big time and timeouts were frequent. After many many many hours on the phone (and many fake ‘reference numbers’ a team was sent to move the antenna. They left in a hurry without testing, claiming the whole network was down so it was impossible. (A huge lie, surely they can test signal levels to their base station without a working internet!). Several hundred (no jokes) phone calls later and without sending a team to check the signal again, they claimed there were too many trees, and they would come to collect their equipment soon. Which was a week later. When I wasn’t at home. I rushed home from work happily as Access Kenya are now out of my life 🙂

    For an expensive, dedicated, premium home ISP they’re remarkably poor with customer service.

  • Robert Yawe

    Interesting, but I ask how many shares would I need to buy of AccessKenya so as to request for a seat on the board?

    The company has potential and I strongly believe that what it needs is the right governance in addition if we are so sure that the public was robbed I believe this would qualify as an economic crime so why don’t we pursue this direction instead of thrown vitriol into the wind.

  • Sick_of_stupid_blogs!

    Your article is a collection of rumors, and random rambling from AKs’s competition. It is poorly written, hardly researched and lacks logic (See the part where you say the Somen brothers blame the poor performance on Openview acquisition then the part where you contradict your own article and say that they blame the metro fibre)

    You have not presented us with a single fact of how the looting took place, evidence of how it was achieved and why the brother are still walking scot free. If what you claim happened, then the Somen brothers executed one of the most complex schemes in Kenya and bribed an amazing no. of CMA executives to keep quiet and not call the cops or KACA on them.

    When a company goes public, part of the money earned goes directly to the people who own the company NOT back to the company! There is no looting there, in business that is called an exit strategy.

    • Turns out YOU/Wabbie & Co may need to check your facts out. Twas in the papers LAST year that the CMA were onto AK after having been Formally enlightened of the discrepancies by the PREVIOUS AK board.

      If you know anything about fundamentals or facts.. also think of something basic like “Investment Logic” & “Intuition” When a number of Highly regarded Directors started resigning on their on volution-WAY before their “exit strategy”.. that should have been a redlight alarm bell for you and many.

      You may think-rightly that its a collection of rumours.. but Google- is a Strange thing- when it comes to dredging out information. Coupled with massive exit of AK’s customers to other services, underpaid staff, under-delivery of services- an inactive social media strategy even the HOME.AccessKenya site for a PLC that “thinks” it takes itself seriously- Are Very Telling that Where there is smoke- Something IS burning!!

      • Sick_of_stupid_blogs!

        When you repeat a lie over and over again it becomes the truth to simpletons like you @MumBi and Robert. Give me evidence not speculation ati it was in the papers last year so it must be true… for fucks sake, this is 2011! This gutter press sensationalistic bullshit is dead.

        It was in the papers that Uhuru was carrying $10M in his hand luggage from the Hague go figure!

        • Mary

          Silas Savali, why are you using insults? You have failed to trust your brain? And if the $100 Million story was wrong then everything was wrong? Give us evidence to show that it is not true. Robert has shown that it is true.

          Stop being simple minded. Access Kenya is your employer but you look brainless when you present no facts but spits “fucks”, “shit” and “stupid” as facts.

        • Fortunately Silas-Your So professional!_One can lead the cow to water- but cant force it to drink. It so easy to get the story from BusinessDaily or simply google it out- you have the means come-on (if ur still at Ak) put something to good use there atleast and google the “sensational stories” out then come back and trade curse words with other “simpletons”

      • Mary

        @twitter-273102018:disqus this @e83017384ace129c18ab8b894e0d0611:disqus is actually Silas Savali who is an employee of Access Kenya. Don’t take him seriously.

  • Ewabwaya

    This is seriuos for real

  • Wabbie71

    Quite an emotive, biased article, full of misinformation and sensationalism. AccessKenya is still strong and its fundamentals are right. Like any biz, after huge investments you don’t recoup immediately.AK is still a company to watch with huge prospects. Wait until the half year results are announced and all this will be hogwash!!

    • Mike

      That is Nancy Imunde the PRO of AccessKenya speaking. Why not just respond in a professional manner if it is not true?

  • Diavolo Malafemmina

    For Silas Silvas @wabbie71:twitter and other professionals..Try use ur AK, surf around.. and start “sensational stories like “AK under CMA Scrutiny here http://www.businessdailyafrica.com/Company%20Industry/AccessKenya%20under%20CMA%20scrutiny/-/539550/921764/-/eircds/-/index.html Then you get another “sensational one like”http://nairobilawmonthly.com/index/content.asp?contentId=90&isId=4&ar=1 then continue surfing.

    Every other “simpleton” knows AK can pull out of this.. their current management n Directorship.. need to take a GOOD hard look at who they are? why they are here? what they are doing? and how they can do it better? SImple Brand Fundamentals.
    Then they should come out and tell the public- the truth, what to expect about possible dividends etc in the next quarter or year rather. Kenyans are a chilled out lot.. we can wait- if its genuine.. of course its your foreign/silent investors that will determine the cue to take- it will take some time but its not impossible

  • Serious Kenyan

    Get the facts right first before you write. I dare you to go to CMA and get a signed document from the CEO and post it on this blog as evidence of your so called “research”.

    • What documents are you talking about? 

  • Duetcapital

    They say that numbers never lie and the access share price says a lot about the state of affairs. If my economics teacher is to be trusted, the stock exchange is the closest thing to a perfect market in which all participants have perfect information. Their valuation of the stock speaks volumes about what info they have about the company. While the tech industry is trying to develop crowdsourcing, I think it is safe to say that the NSE index is the closest attempt at crowd sourced information. And remember the Bible also says that where 2 or more a gathered, there will be the presence of God. In this game, information is not king, information is not gold, information is god, with a small G. The market is right! Something so fishy that it can swim and smells happened with Access Kenya!

  • Cavinojijo

    how to buy shares