Safaricom has so far attracted KSh191 billion from both local and foreign investors, surpassing the Treasury's target of Sh50 billion by nearly four times and making it Sub-Saharan Africa's biggest initial public offering.

The money counted so far represents 382 per cent subscription, as foreign investors put in a premium of 50 cents above the price set for domestic investors of KSh5.

The international price of KSh5.50, is expected to be the lowest price that will be quoted by those seeking to buy the share at the secondary market. Initial indications were that the international pool was receiving bids at between KSh6 and KSh6.50 per share.

It is, however, understood that the government had one eye on events after the share is listed in setting the international premium lower at 50 cents above the local pool price.

"The level of demand at the clearing price will ensure adequate after market support for the stock after the commencement of trading expected on June 9 2008," the government statement said.

A manager at Suntra Investment Bank and another at Stanbic Investment Services had earlier said a high premium on the international pool would stifle capital gains after the listing.

The government said the IPO had exceeded its expectations in many ways.

"Upon completion, the Safaricom IPO will be the largest Sub-Saharan IPO ever completed surpassing those of SANLAM and Telkom SA (both from South Africa)," said Investment Secretary Esther Koimett in a statement.

"On a pan-African basis it will be the third largest IPO after those of Maroc Telecom and Telecom Egypt," she added. With domestic investors subscribing Sh115 billion, equivalent to an oversubscription of 254 per cent), they had already exceeded the set minimum for them to qualify for a further allocation of an extra 1.5 billion shares.

While local investors' initial allocation was 6.5 billion shares they can now get 8 billion shares as the foreign investors lose the 1.5 billion shares initially allocated to them. In the prospectus the government had proposed that if the domestic pool was oversubscribed by 200 per cent, their shares allocation would be increased by up to 15 per cent of offer.

That translates to a subscription of 300 per cent or KSh97.5 billion for the domestic pool which has already been surpassed.

With foreign investors price set at KSh5.50, the amount received from them will be Sh11 billion, while the total from the domestic pool will be Sh40 billion making a total of KSh51 billion - KSh1 billion more than the minimum expected in the prospectus but Sh17 billion more than initially put in the 2007/8 national budget.

The massive oversubscription has spawned debate on whether the government can exercise the green shoe option where more shares than contained in the prospectus are allocated with permission of the Capital Markets Authority.

A source closely involved in the transaction but not authorised to speak for the IPO said the option could not be considered because the cabinet needed to have set aside more shares in advance for the sale than the 25 per cent it allowed.

"You would need to go back to the cabinet which has to offer more shares. The cabinet approved 25 per cent of the total shareholding," he said.

He said that under many jurisdictions, the custom is to have up to 15 per cent more shares allowed to be offered under the "green shoe option".

But it does not enjoy widespread support even in Kenya. Bob Karina, MD of Faida Investment Bank, said that the option of increasing the percentage floated to the public is not appropriate because it would deny the market the appetite it needs for higher prices once trading begins.