Then i think what would be most fair to the current shareholders is if the strategic investor bought out 1 or 2 of the major shareholders. Because those major are either adding value or not, so it will be like a change in ideas. The strategic investor wil off course have to bid at a considerable premium-which might not be viable as you say.

Creation of new shares will dilute eps too much, yes they may add expertise and what not, which is a probability, but im looking at the numbers which are already there.

And the way share actions affect share price, the share may really come down(which is great coz ill buy more, but im really satisfied with the management as it is and i dont think we need with strategic investor NOW)

KK is doing well but could do better especially on its net margin..

Earning 5 billion PBT against a revenue of 222 billion screams of serious inefficiency..

@guru I wouldn't lose sleep over the 222B T/over versus 5B profit. Management did indicate because of the increased activity on the Africa trading desk the volumes and in turn sales shot up massively. 50% of the total volumes 3m metric tonnes were attributed to the trading activity which has extremely thin margins and almost nil operating costs (salary of the 3 guys doing the trading and depreciation of the desk). My big worry though is the possible forex exposure from this trading desk. KK is getting into a situation where they have to get proper FX dealers and robust management policy in place in house (not those from banks) to manage this risk. 1.5B forex looses and a significant portion of it in closed forward positions is quite ugly for shareholders. However this trading desk is and will be their game changer going forward and for quite some while.

I suspect the strategic investor is bringing in money and possibly deal contacts to allow KK get more presence in markets it lacks presence. A PE player is more likely than an oil company. This to me will be great news especially when looked at together with the africa trading desk. What KK is simply doing is being an independent in the upstream and midstream businessres using its large downstream business. Great penetration in Africa means more opportunity and flexibility to increase the africa trading business volumes at no incremental cost. I would be thoroughly dismayed if one of the 2 large shareholders sold any of their holdings. It would signal weak prospects ahead, but increased shares for more money would be perfect.

I don't think entry of a strategic investor through increased shareholding will be that price dilutive. I expect the price to spike up considerably ahead of the strategic investors entry to protect existing large shareholders. We saw it in Equity, Coop bank etc. In any case one can justify KK's case given that it's the most undervalued stock on the NSE and therefore Segman and co. would be mad to allow a strategic investor entry at a below 15. Any investor would be excited at a price below 15 because it's a one way bet to returns. All valuations done in the market both buy and sell side place KK above 15/share therefore highly unlikely a PE investor will want to spend time haggling for a price below 15.

@kausha - guru doesn't understand the trading desk business. Sorta how a bank's forex trading desk can have a huge 'turnover' on a small equity investment & low 'margin' but high ROE.

15? I see 20/- as the price to beat by 2014 whether the strategic investor comes in or not. There is something about organic growth which KK has done well. The alternate may be a complete (or most of KK) being sold to another firm.

Some businesses like Trading Desk require smarts & flexibility that KK has. Not easily translated or moved over in a merger or acquisition.

What KK has officially done is say... "We are for sale!"